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05/06/2017

For the week 5/1-5/5

[Posted 11:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.

Edition 943

[There are some late-breaking news events as I go to post tonight, involving the French election and Syria. It’s impossible for me to cover them in any detail at this stage, but neither is good on the surface.]

The Trump Agenda...Congress....

President Trump achieved his first real legislative success on Thursday as House Republicans, by a 217-213 margin, passed a controversial overhaul of ObamaCare.  Yes, it was but a first step in a process that has a long, long ways to go, but it was an important one especially for two men, Trump and House Speaker Paul Ryan.

The official name, the American Health Care Act, AHCA, will of course be labeled TrumpCare by Democrats from here on, and it’s true the Congressional Budget Office has yet to grace us with their analysis of the costs and impact on insurance coverage, but it’s now out there.

As Republicans celebrated with a rally with the president in the Rose Garden, Democrats waved to Republicans on the House floor, chanting, “Hey, hey, hey, goodbye” – a taunt suggesting the Republicans are toast in the 2018 mid-term elections.  And depending on how the process now goes in the Senate, they just might be.  But, for today, they’ve kept a key campaign promise, ditto the president.

In the immediate aftermath, though, some Republican senators said the House version was dead on arrival.

Republican Sen. Rob Portman (Ohio), for one, told the Wall Street Journal, “I’ve already made clear that I don’t support the House bill as currently constructed, because I continue to have concerns that this bill does not do enough to protect Ohio’s Medicaid expansion population, especially those who are receiving treatment for  heroin and prescription drug abuse.”

Senate Majority Leader Mitch McConnell (R., Ky.) can afford to lose just two seats from his slim 52-48 majority, and it’s not clear what elements of the House package may end up requiring 60 votes rather than a majority, meaning those provisions could be stricken.  [Or Republicans will amend the rules, “reconciliation,” to make it easier.]

Here’s my bottom line...my line since the beginning.  ObamaCare is failing.  That’s a fact.  We all hear the same stories, day after day.  I’m amazed at those people who still can’t accept that.

But it’s the old game of now everyone is used to it, it’s perceived to be a benefit, and we don’t want it taken away.

It’s this attitude that will doom our nation in another generation or so on an even bigger issue, the deficit.  As the deficits explode further, and as interest rates normalize, the interest we pay on the debt will soar in kind and if you think we have issues with taking benefits away today?  Just wait.  You ain’t seen nuthin’ yet, boys and girls.

ObamaCare is now perceived to be just another entitlement, and for decades...DECADES... Congress and the American people haven’t had the will to face the looming crisis.  But I’ll be dead, I think, when it hits us in the face.  Those much younger than me will be forced to break into their neighbors’ homes for food when the real Civil War begins.  You think we’re divided today?  Ha!

But I digress....

Editorial / Wall Street Journal

“The media template for covering the 115th Congress apparently goes like this: When Republicans fail to pass a bill, they’re doomed.  But when they succeed, they’re also doomed.  Thus the same media sages who said the House could never repeal ObamaCare are now saying that the replacement the House passed Thursday can’t pass the Senate.

“The wish is the mother of this analysis, and predictions about the Senate are worth about as much as the guarantees of President Hillary Clinton.  The reality is that the House success, however narrow the 217-213 vote, is the first essential step toward fulfilling the GOP’s top campaign promise.

“While the job was messier than it should have been, the result shows that Republicans can hold a governing majority despite unprecedented media, interest-group and Democratic hostility.  The majority spanned the GOP conference from Michigan libertarian Justin Amash to moderate Carlos Curbelo, who deserves special notice for  political courage considering his swing Miami district.  If you doubt this is a big moment, imagine the media obituaries for Republicans if they had failed.

“Credit goes to House leaders for sticking with their essential product and working around the edges to cajole a majority.  The bill that passed is remarkably similar to the one the GOP leaders first introduced. The changes demanded first by the Freedom Caucus and then some moderates are tweaks that don’t alter the reform’s core architecture.

“The bill includes deregulatory steps to pave the way for a variety of insurance coverage that more people can afford; the largest entitlement reform in decades by devolving control over Medicaid to the states; a $1 trillion spending cut over a decade; tax credits for individual insurance that begin to equalize the tax treatment of health care for individuals and businesses; and the repeal of ObamaCare taxes totaling $900 billion over 10 years.

“The bill doesn’t appeal all of ObamaCare because it can’t without Democratic help under the Senate’s budget rules.  But the bill marks a giant step away from the Democratic march to government-run health care, which is why the political and cultural left have been so vitriolic in their denunciations.

“The Senate will now put its stamp on the policy, and no doubt there will be many perils of Rand Paul-ine moments with only a 52-seat GOP majority. The House bill will change, but reporters who think it is doomed should get off Twitter and make some calls.  Majority Leader Mitch McConnell has been counting votes and calculating necessary compromises for some time.  House Republicans should be prepared that some of their planks may not survive Senate budget rules.  They’ll have to be flexible enough to accept the compromises that are inevitable in a bicameral legislature.  The trump card, so to speak, is that this process will yield a binary political choice: Either Members vote for what emerges from the House and Senate, or live with the status of ObamaCare.”

For his part, President Trump must hit the road and sell the details to the public.

Meanwhile, there was another big legislative act this week, approval of a $1.1 trillion spending bill to keep the government open through the end of the September 30 fiscal year.  Democrats are crowing they secured nearly $5 billion in new domestic spending, which will be harder to strip out of future budgets, while some of Trump’s priorities, including for a border wall, were neutered. And they secured funding for Planned Parenthood, miners’ health benefits and Medicaid payments for Puerto Rico.

But Republicans did gain $15 billion in supplemental defense funding requested by the administration, which is not insignificant, even if it falls short of the original request for about double that.  And it authorizes the largest pay raise for the military in six years, 2.1 percent.

Nonetheless, President Trump was upset by the process and called for changing Senate rules to eliminate the legislative filibuster, suggesting the need for a “good shutdown” to change Washington come September.

“The reason for the plan negotiated between the Republicans and Democrats is that we need 60 votes in the Senate which are not there!  We either elect more Republican Senators in 2018 or change the rules now to 51%,” Trump tweeted.

“Our country needs a good ‘shutdown’ in September to fix the mess!”

Rest up in August, folks!

Finally, following are some excerpts from President Trump’s op-ed in the Washington Post on his first 100 days:

“One hundred days ago, I took the oath of office and made a pledge: We are not merely going to transfer political power from one party to another, but instead are going to transfer that power from Washington, D.C., and give it back to the people.

“In the past 100 days, I have kept that promise – and more.

“Issue by issue, department by department, we are giving the people their country back. After decades of a shrinking middle class, open borders and the mass offshoring of American jobs and wealth, this government is working for the citizens of our country and no one else.

“The same establishment media that concealed these problems – and profited from them – is obviously not going to tell this story. That is why we are taking our message directly to America.

“We have opened the White House doors to listen, engage and act. We’ve invited in labor leaders, factory owners, police officers, farmers, veterans and Democrats, Republicans and independents.

“The change began with the termination of the Trans-Pacific Partnership – a 12-nation pact that would have shipped millions more jobs to other countries.

“But leaving the TPP was only the beginning.  We have also launched an investigation into foreign trading abuses and taken steps to protect the production of American steel and aluminum.  After years of federal contracts going to foreign bidders, we are ensuring that government agencies enforce ‘Buy American’ rules and give preference to American companies – and that American companies hire American workers....

“At the center of our economic agenda, we’ve undertaken the most far-reaching effort in history to remove job-killing regulations.  I’ve ordered that for every one new regulation, two old regulations must be eliminated.  We’ve signed a record 13 Congressional Review Act resolutions to scrap job-crushing regulations, and I’ve signed 29 pieces of legislation in total – a mark not surpassed in the first 100 days since Harry S. Truman....

“On energy, the change has been profound.  We’ve canceled restrictions on the production of oil, natural gas and clean coal.

“What we’ve accomplished on immigration and criminal enforcement is nothing short of historic.  After decades of unending illegal immigration and mass uncontrolled entry, we’ve turned the tide as never before – illegal border-crossings are down 73 percent.  Visa processes are being reformed to substantially improve vetting and screening, and we’ve launched prototypes and bidding for the border wall to stop the scourge of drugs, human trafficking and illegal immigrants from coming into our country....

“The change on defense has been profound as well. The Defense Department has begun to rebuild and restore our military readiness.  We’ve reasserted American leadership by holding the Bashar al-Assad regime in Syria accountable for its monstrous use of banned chemical weapons against helpless, innocent civilians.....

“I delivered on one of my biggest promises, appointing and confirming a new justice to the Supreme Court who will be faithful to the U.S. Constitution....

“As we’ve made these changes – on the border, on our economy, on our security – confidence has soared.  And a survey of manufacturing reveals record-breaking optimism in the future.  Consumer confidence hit a 16-year high.  Thousands of new jobs are being re-shored back to America....

“No longer will we listen to the same failed voices of the past who brought us nothing but war overseas, poverty at home and the loss of companies, jobs and our wealth to countries that have taken total advantage of the United States.

“The White House is once again the People’s House.  And I will do everything in my power to be the People’s President – to faithfully, loyally and proudly champion the incredible citizens who love this nation and who call this God-blessed land their home.”

Wall Street

Friday saw the release of the April jobs report and the figure on nonfarm payrolls reflected an increase of 211,000, better than the 187,500 forecast, with the unemployment rate dropping to 4.4%, the lowest since May 2007.  The March number, though, was revised down from 98,000 to 79,000.  Nonetheless the four-month average is 185,000.

The underemployment figure, U-6, the true level of unemployment, is now down to 8.6%, falling steadily, and this is good, sports fans. It’s the lowest since late 2007, with the average for U-6 two years before the recession being 8.3%.

Average hourly earnings were up 0.3%, though the year on year figure of 2.5% remains below what you want to see in a normal recovery (and below December’s 2.9%), which is far from what the last eight years have seen; the converse, a putrid recovery.

Separately, March personal income rose a less than expected 0.2%, while consumption was unchanged, not good, and continuing a troubling trend.  Business confidence may be rising, but the consumer remains uncertain (despite Trump’s comments above).

The April ISM reading on manufacturing was 54.8 (50 being the dividing line between growth and contraction); while the ISM services reading for the month was a solid 57.5, above estimates.

Meanwhile, the Federal Reserve’s Open Market Committee gathered in Washington this week and, as expected, Chair Janet Yellen and her band of merry pranksters held the line on interest rates, but the odds of a June rate hike, when they hold another confab 6/13-14, rose to 95%.

Even though the first-quarter GDP report was abysmal, with economic growth coming in at an annual rate of just 0.7%, the Fed believes the slowdown is “transitory,” but in their accompanying statement, policymakers had to concede consumer spending had grown “only modestly” lately.

The FOMC said: “The committee...continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2 percent over the medium term.”

With inflation sluggish, as noted in the Fed’s preferred personal consumption expenditures barometer, core PCE at 1.6%, it’s hard to build a case for a June rate hike. That is if the Fed stuck to language it had used for years; that it wanted to first see inflation hit 2% on core for a while, and that it was willing to let it run a little “hot” until it was ensured the economy was in consistent growth mode.

The Fed lifted rates a quarter point in mid-March and signaled it was due to raise another two times in 2017.

Stocks rose a third straight week, powered by solid earnings.  More below.

Europe and Asia

First, a slew of economic data from the eurozone (EA19). 

The flash reading on first-quarter GDP was 0.5% over the fourth-quarter, up a solid 1.7% year over year, as reported by Eurostat.

The unemployment rate for the euro area was 9.5% in March, unchanged from February, but still the lowest since April 2009, and vs. 10.2% in March 2016.

Germany’s jobless rate was 3.9%; France 10.1% (same as a year ago); Italy 11.7% (actually up from 11.5% March ’16); Spain 18.2% (down from 20.3%); Netherlands 5.1%; Ireland 6.4% (down from 8.3%); and Greece 23.5% (Jan.).

The youth unemployment rate in Italy was 34.1%; Spain 40.5% (though down from 46.2% March ’16); and 48.0% in Greece (Jan.)

The final reading on the composite eurozone PMI for April was 56.8 vs. March’s 56.4. 

The April euro area manufacturing PMI was 56.7 (56.2 in March) and 56.4 on services (vs. 56.0).

Germany: 58.2 (mfg.); 55.4 (services)
Italy:  56.2 (mfg.), 73-mo. high; 56.2 (services...best since Aug. 2007!)
France: 55.1 (mfg.), 72-mo. high; 56.7 (services)
Spain: 54.5 (mfg.); 57.8 (services)
Greece: 48.2 (mfg.)

[All PMIs courtesy of Markit]

Chris Williamson, chief economist at IHS Markit:

“With the final reading coming in slightly above the earlier flash estimate, the PMI surveys portray an economy that is growing at an encouragingly robust pace and that risks are moving from the downside to a more balanced situation.

“The April Eurozone PMI is historically consistent with a GDP growth rate of 0.7% [Ed. quarter-over-quarter], with similar rates of expansion signaled for both Germany and France.  Even faster gains are being indicated in Spain and  Ireland, and Italy is also seeing growth perk up, highlighting the increasingly broad-based nature of the current upturn.

“Price pressures remain elevated, and the survey’s price indices suggest that core inflation will trend higher in coming months.

“The encouraging picture from the survey data is likely to help raise many forecasters’ expectations of eurozone economic growth in 2017, and will also no doubt add to speculation the ECB rhetoric will turn increasingly hawkish.”

For now, however, the ECB is in no hurry to end its extraordinary stimulus.

In the U.K., the April mfg. number was a far-better-than-expected 57.3 (vs. 54.2 in March), a 3-year high; services 55.8. [The weaker pound has kept British producers humming, and competitive, on the world stage.]

New car sales in the U.K. for April, however, were down 20% owing to changes in the excise tax).

French Election: Come Sunday night in France, 39-year-old Emmanuel Macron, a man who has never held elected office, will become France’s new president, as all of the polls at week’s end had the same result, Macron defeating far-right candidate Marine Le Pen of the National Front by about a 62-38 margin, and there is zero reason to doubt the eventual result.  Le Pen’s people needed the polls to narrow from the 59-41, 61-39 margins reflected in the post-first round surveys, to about 55-45, to cause the EU and global financial markets to shudder a little, but this is not the case.

But if Macron supporters act like it’s already in the bag and stay home en masse, then we might have a different story.  That said, there is likely to be a high abstention rate of as much as a quarter of the French electorate, with the candidates of the mainstream political parties having been eliminated in the first round of voting April 23.  But these polls have been good.  I’ll say it’s 58-42.

In the final week, Le Pen tried to cement her base in rural and industrial areas, while appealing to those conservatives who supported candidate Francois Fillon; Le Pen going so far as to basically lift one of his campaign speeches verbatim in her May Day appearance outside Paris.*

The next day she was accused of plagiarizing, and later her campaign admitted she lifted it to prove she shared some of his supporters’ values.

*I wrote of my past May Day experiences in Paris last WIR.  It turns out that Marine’s father, 88-year-old fascist Jean-Marie Le Pen, held a small demonstration at Joan of Arc Square on Monday, but Marine held a large rally in the suburb of Villepinte.

There was violence in Paris that day, with at least six policemen hurt, one seriously, with protesters launching petrol bombs in the middle of the city, which would have been disturbing to come upon if you were a naïve tourist. 

Meanwhile, most of France’s leading trade unions told their members not to vote for Le Pen, but only two expressed support for Macron.

For his part, Macron rejected calls from the Left to amend the pro-business reforms in his program, though he still needs some left-wing votes.

The two candidates held an extraordinary, vicious final debate Tuesday night, with tons of personal insults hurled at each other.  Macron accused Le Pen of being a “parasite” on the French political system, while Le Pen suggested that Macron would rule with a German whip. Le Pen also made fun of his marriage; he being 39, his wife 64.

Le Pen is already saying that if she receives more than 40 percent, it would be “an enormous victory” that would position the party “as the only real, credible opposition.”  [This wouldn’t be far from the truth.  But the National Front needs to poll well in the parliamentary elections next month.]

Separately, former President Obama endorsed Macron in a video message released by the Macron campaign on Thursday.  That would irritate the hell out of me if I was a French voter.

“I’m not planning to get involved in many elections now that I don’t have to run for office, but the French election is very important to the future of France and the values that we care so much about,” said Obama.

As a sign of confidence in Sunday’s vote, the gap in yield between the German and French 10-year bonds has narrowed to the smallest in over six months.

One more, there are signs that Macron’s year-old En Marche! movement is set to emerge as the largest party in parliament, when those elections are held in June, meaning he would probably be able to push through his program, which was a concern just a few weeks ago.

*But as I go to post, the Macron campaign announced Friday night that it was the victim of a “massive” computer hack, with its campaign emails posted to a document-sharing site just hours ago.  Of course the Kremlin is the prime suspect, as they do not want Macron to win.  The details of what has been leaked, let alone the authenticity of the emails, is not known as I close up for the week.  The French government, by law, is not allowed to comment as official campaigning is now ended.

Brexit: The latest polling for Britain’s snap election, June 8, shows Prime Minister Theresa May’s Conservatives with a 19-point lead over Labour, 47-28, according to an ICM survey. It had been 22 in this one.  The Liberal Democrats are at 9% and Eurosceptic UKIP is at 8%.

An ORB poll for the Sunday Telegraph had it 42-31, but this is definitely an outlier.

May’s hopes of victory were boosted with results in local contests this week that showed Labour suffering losses and the UKIP vote collapsing.

The Conservatives won the West of England metro-mayor contest and gained control of five councils.

The UKIP losses are significant in that their voters are switching to the Tories (Conservatives), which could provide a further boost to the prime minister (and another reason why the ORB poll last Sunday is wrong! mused your editor).

Results from 17 of the 88 councils holding elections in England, Scotland and Wales showed the Conservatives with 429 councillors, a net gain of 109, while Labour had 231, a net loss of 58.

Meanwhile, last weekend the European Commission came up with its negotiating guidelines for Brexit at a summit in Brussels, wherein EU leaders suggested Prime Minister May’s ambitions for the negotiations, such as on a “comprehensive” free-trade deal with the EU at the same time as it negotiates its departure from the bloc, were totally unrealistic, with Mrs. May denying she was in a “different galaxy” from them.  It has become immediately clear this is going to be a very rough two years of talks, as I told you would be the case going back to last June and the referendum.

May told the BBC’s “Andrew Marr Show,” “The EU has also said that nothing is agreed until everything is agreed. I want to ensure that we agree on a trade deal and our withdrawal arrangements so that we know what both of those are when we leave the European Union.”

Earlier, European Commission President Jean-Claude Juncker told the summit that Mrs. May had impossible expectations, with German Chancellor Angela Merkel having earlier warned that some in London harbored “illusions” about what Brexit could achieve.

Britain’s Brexit secretary, David Davis, said the negotiations would be handled with “goodwill” but would be “tough and, at times even confrontational.” 

Merkel said there was no conspiracy to punish Britain.

The EU, though, says British expectations on the pace of divorce discussions are over-optimistic.  Juncker said “our British friends underestimate the technical difficulties we have to face.”

The EU also wants the British to agree to guarantee the rights for European nationals living in the U.K. and eventually the right to remain there, including those who arrive up to the eve of Brexit, which today is expected to be around March 2019.

And remember, part of Brexit is a financial settlement, as Britain is still responsible for its share of future EU expenses, such as on pension obligations. First estimates were Britain would receive a bill of between 40bn and 60bn euros, but there are some stories out there talking about a bill of up to 100bn.

David Davis said in response to the figures being bandied about, “We have said we will meet our international obligations, but there will be our international obligations including assets and liabilities and there will be the ones that are correct in law, not just the ones the Commission wants.”

There are also stories EU members want to limit Prime Minister May’s access to future summits, but Davis said he will not stand for such treatment while the U.K. is still technically a full member.

The bottom line is the EU must ensure the U.K. is worse off outside than inside, to avoid setting a precedent.

For her part, Prime Minister May struck back at Juncker, accusing him of trying to sabotage the June 8 vote in Britain by leaking details of their Brexit discussions.

“The events of the last few days have shown that – whatever our wishes, and however reasonable the positions of Europe’s other leaders – there are some in Brussels who do not want these talks to succeed, who do not want Britain to prosper,” May said.

Continuing, May added that “Britain’s negotiating position in Europe has been misrepresented in the continental press,” that “threats against Britain have been issued by European politicians and officials” and that all of “these acts have been deliberately timed to affect the result of the general election.”

What particularly set off Mrs. May was the leaking of details of her April 26 dinner with Juncker to a German newspaper, but this gave her an opportunity to set the debate between herself and a bunch of EU bureaucrats.

Later in the week, Donald Tusk, president of the European Council, called for a calmer tone to negotiations.

The talks are “difficult enough,” he tweeted on Thursday.  “If emotions get out of hand, they’ll become impossible.”

The reason why the trade issue is so big is because Mrs. May wants to show voters she is getting them something from the breakup.  But every EU member must agree to move on to trade and EU negotiator Michel Barnier said the target for that is the end of this year, likely meaning a Dec. 14 scheduled summit.

That would leave only around 12 months to work on a trade pact for tariff-free commerce (thru end of 2018), and consider that it took the EU and Canada seven years to strike a recent accord.  Plus, unless all 27 EU leaders agree to an extension of Brexit talks, the U.K. would leave the EU in 2019 without a deal, thus the EU has all the leverage in the negotiations.

The Brexit discussions won’t begin in earnest until after the June vote in the U.K.

This whole mess is just getting started.

Greece: A deal with creditors on details for a new set of reforms has been reached, but they must be approved by the Greek legislature before the country can receive the next round of bailout funding from its 86bn euro program.

There are new structural measures and fiscal reforms, including another round of pension cuts, which are to be applied in 2019.  Pensions have already been reduced by over 40 percent since 2011, and now they are to be cut another 18 percent, so you can imagine the public is not too pleased.

But the government of Alexis Tsipras must get this through parliament and in time for a euro area finance ministers meeting on May 22.

Tsipras’ ruling leftwing Syriza and his rightwing coalition partner hold just a three-seat majority, with opinion polls showing the opposition center-right New Democracy with a double-digit lead, meaning the coalition will back the measures unanimously, or else a snap election would be triggered and that would be a disaster.

If Greece doesn’t get the bailout funds, they won’t be able to meet their July debt service payments of more than 6bn euro.

The agreement by the legislature would also secure the IMF’s participation in the current bailout, which has been a requirement of Germany.

But the IMF wants Greece to receive debt relief before it joins the bailout, while the German government rules out such a “haircut” ahead of September’s election there.

Ergo, this whole thing is still a mess, but it is believed once again Greece, and the continent, will dodge a bullet.  [After the September election, you would think Germany and the IMF will reach an agreement of their own on the debt relief topic.  You can understand why the German people are tired of throwing their good money after bad.]

Italy: Former prime minister Matteo Renzi staged a political comeback less than five months after he resigned, easily regaining the leadership of the ruling Democratic Party (PD) last weekend.  Renzi received 72 percent of the party faithful

A national vote is due by May 2018, and today the polls show the PD behind the anti-establishment 5-Star Movement, which questions the country’s euro membership.  Yes, this is the next potential crisis for the EA19.

Turning to Asia, in China, the private manufacturing (Caixin) PMI figure for April was just 50.3 vs. 51.2 in March, while the services figure cooled to 51.5 from 52.2.  The manufacturing number was the worst since September.  [The official government manufacturing PMI, as previously announced, was 51.2; the government’s reading on services was 54.0 vs. 55.1 in March.]

GDP was 6.9% in the first quarter, stronger than expected, but remember, Beijing’s full-year target is growth of 6.5%, so with the PMIs showing less vigorous activity, due to the government’s ongoing efforts to cool the property sector, while it also attempts to contain financial risks, we’re likely to see 6.5% growth, or slightly below, the rest of 2017, and by next January, when the GDP data is added up...voila!  It will be 6.5%!  [Maybe 6.6%.]  Yes, just like magic.  Amazing how that works when one man runs everything in the country.

In Japan, the April manufacturing PMI was 52.7 vs. 52.4 in March, with services at 52.2 vs. 52.9.

South Korea surprised with its figure for April exports, up a far-more-than-expected 24.2%, year over year, the fastest pace since August 2011.

Exports of memory chips soared 56.9%, amid rising demand for high-tech products.
Exports to the U.S. rose 3.9%, and were up 10.2% to China despite the bad blood between these two over the deployment of the THAAD missile defense system in South Korea (more below).

Separately, South Korea’s manufacturing PMI came in at 49.4, though this was an improvement from March’s 48.4.

[Taiwan’s April manufacturing figure was 54.4, solid, but down from 56.2 in March.]

Street Bytes

--Nasdaq hit another all-time high during the week, closing at a record 6100 today, ditto the S&P 500, which finished at a record 2399.   The Dow Jones would have closed at a record of its own, were it not for the news Warren Buffett had cut his stake in IBM 30%, and the stock fell 2.5% in response.  The Dow, at 21006, was just nine points shy of its high.

Revenue growth among the 400 or so S&P 500 companies reporting earnings thus far has been solid, up around 8%.

--U.S. Treasury Yields

6-mo. 1.00%  2-yr. 1.31%  10-yr. 2.35%  30-yr. 2.98%

Yields are inching up with the feeling that the Fed is preparing to move again, but the bond market is still too sanguine.  The Atlanta Fed’s GDPNow indicator for the second quarter has Q2 growth at 4.2%, vs. the 0.7% number registered in the first.

Granted, this figure often starts high and then slides as the quarter progresses, but if it stays up there a month from now, you won’t be talking about a 2.35% 10-year.

--So much for the impact of OPEC’s production cuts.  Oil slid this week back to $45 a barrel for the first time since the cartel announced the cuts, before rallying a bit to $46.47 at week’s end, still down over $6.00 in just three weeks.  It’s all about U.S. shale production ramping up again, which is blunting the impact of OPEC’s moves. 

OPEC and Russia are going to extend the cuts into the second half, with the former holding a meeting May 25 in Vienna to formally extend them.

--I have written extensively of how the average home price in America is substantially higher now than its prior high-water marks, as measured by both the S&P CoreLogic / Case-Shiller data, as well as the National Association of Realtors, but this week, real estate research firm Trulia issued a report, with their chief economist weighing in on the topic.

“The U.S. housing market hasn’t recovered. When you actually look at the value of any individual house, you’re much more likely to find houses that haven’t reached their” previous highs.

Trulia argues that indices such as Case-Shiller and the Federal Housing Finance Agency give more weight to expensive homes, while it looks at the market value of each home compared with its prerecession peak.

Trulia’s work thus concludes that only 34.2% of homes nationally have surpassed their previous highs.

--The blizzard last weekend in the Plains States, from the Texas Panhandle to Nebraska, with 12 inches or more of snow dumped in many areas, did a big number on cattle, winter wheat and other crops.

For example, wholesale beef prices jumped to a 13-month high as a Kansas livestock group estimated the storm may have killed thousands of animals, thus tightening supply.  Feedlots lost a lot of younger animals in particular.

Separately, shares in Archer Daniels Midland fell sharply this week after the company said it was still seeing a grain surplus that would weigh on prices, and its global trading unit, as crops pile up across the globe.  It’s a subdued environment for trading, executives told analysts, ergo smaller trading profits.]

--April was not a good month for auto sales in the U.S. and sales for the year are expected to fall after last year’s record 17.55m level, up from the prior year’s 17.5m.  Most analysts now believe 2017 will be somewhere between 16.5m and 17.0m.

For the month, Ford sales fell 7.2% (down 10.5% on the retail side, flat on fleet sales), General Motors’ declined 5.8%, much steeper than expected, and Fiat Chrysler’s fell 7%.

There are big inventories to work off these days.

Among the others, Toyota Motor’s sales dropped 4.4% in April, Honda’s decreased 7%, and Nisan Motor reported its first sales decline of the year, with April volumes down 1.5%.

--Apple Inc. reported fiscal second-quarter earnings that beat the Street, $2.10 per share, while the company reported revenue of $52.9 billion, also topping analysts’ forecasts.  But it’s estimate for the current quarter on revenue was a little shy.

The thing is, Apple reported falling iPhone sales, so they need to deliver on a blockbuster new phone in the fall with an iPhone revamp.

Apple sold 50.8 million iPhones in the quarter ended April 1, down from 51.2m.

CEO Tim Cook said during a conference call with analysts, “We’re seeing what we believe to be a pause in purchases of iPhones, which we believe are due to the earlier and much more frequent reports about future iPhones.”

Apple had $257bn in cash* and equivalents at the end of the quarter, and it announced $50bn in buybacks and a 63-cent dividend.

*$240bn of this is overseas.

The company is still losing market share in China, with vendors such as Huawei and Vivo gaining in the region, and Apple’s sales there plunged 14%.

Cook said sales of offerings from Apple’s services, such as iCloud, the App Store and Apple Music, grew 18% to $7.04bn.

Mac sales grew by 14.4%, while sales of iPads fell 11.9%, with unit sales down 13%.

Lastly, Tim Cook said Apple was investing $1bn in a U.S.-based “advanced manufacturing fund” as part of an effort to boost U.S. jobs.  During last year’s presidential election, Donald Trump had criticized Apple for relying on overseas manufacturing facilities.

--Facebook topped Wall Street’s estimates for first-quarter revenue, up 49% to $8.03 billion. CEO Mark Zuckerberg said in a statement, “We had a good start to 2017.”

Facebook reported net income of $3.06bn, up from $1.73bn.

The company added 80 million users in the quarter to 1.94bn, who are on the site at least once a month.  Two-thirds of Facebook’s active monthly users visit the site every day.  FB should pass the 2bn user mark in another month or so, and such growth is translating into ad sales.

But the shares declined a bit after the company also reiterated the rate of growth in advertising revenue would continue to decline in 2017, while expenses will rise, with capex increasing to over $7bn, according to analysts.

Zuckerberg also addressed the fake news issue, announcing the company would be hiring an additional 3,000 additional content reviewers to more quickly remove inappropriate material.

--In his quarterly conference call on Tesla’s results, CEO Elon Musk said he screwed up in naming his new midmarket car the Model 3, because “it’s caused confusion in the marketplace.  We’re going to be a broken record on this front because we have to clear up an error.”

Tesla said Wednesday that Model S orders have taken a hit – because some customers think the 3 is a new version of the S, so they’re holding off on a Model S purchase.

“It’s a bit confusing,” Musk said.

Meanwhile, Tesla reported its net loss grew to $397.2 million, or $2.04 per share, in the first quarter.  In the fourth quarter, Tesla lost $219.5 million.

First-quarter revenue rose 18.4% from the previous quarter to $2.7bn, while car deliveries were up 12%, to 25,051.

The Model 3, which will have a list price of $35,000, will commence production in July, and overall production is expected to ramp up to 5,000 cars a week by the end of the year, 10,000 at some point in 2018, with the company having already projected a production level of 500,000 in 2018, after last year’s 84,000 total.

The shares fell sharply on the earnings, but suddenly jumped in the after-market today and I don’t see a ready explanation.

--Elon Musk deserves credit for his SpaceX venture and another successful launch, this time for a sensitive mission for the U.S. military.  Once again the rocket’s booster landed on land, marking the company’s fifth successful mission of the year.

Landing, refurbishing and reusing rockets is a key to SpaceX’s vision of making space travel affordable.

But the Air Force, for which SpaceX now has certification for national security missions such as this one, does not have a policy as yet regarding the use of pre-flown hardware.  Otherwise, it could be lucrative for both parties.

--JPMorgan Chase & Co. will be moving hundreds of London-based bankers to offices in Dublin, Frankfurt and Luxembourg, as JPM prepares for life after Brexit.

Prior to last June’s referendum, CEO Jamie Dimon told U.K. employees that as many as 4,000 could be relocated should Brexit come to pass.

While Frankfurt has long looked to be a major beneficiary, Dublin appears to be an increasingly favored destination for banks’ EU bases.  Luxembourg seems to be favored by asset managers and insurers.

Early projections have London losing around 30,000 jobs, between banking and financial services.  But some estimates rise above 100,000+.

--The Wall Street Journal’s Richard Teitelbaum reports, “The number of deals world-wide involving publicly traded targets this year fell to 793 as of April 28, according to Dealogic, down 20% from 991 in the comparable period last year and the lowest number since 1998.”

It’s about political and economic uncertainty, plus while high stock-market levels have often led to increased deal activity, it seems this time executives are cautious over the valuations.

--Shares in the New York Times rose the most in over four years on Wednesday after the newspaper reported record digital subscriber growth during the first quarter.  The Times said it had signed up 308,000 net digital-only news subscribers in the first three months, the strongest since the company implemented its online paywall in 2011.  Digital news subscriptions reached nearly 2 million, with the paper now counting 3m total print and online subscribers.
But total ad sales were still down 7 percent owing to the ongoing slump in print advertising.

Total revenue rose 5 percent to $399m, ahead of forecasts, with net income of $13.2m.

--A St. Louis jury awarded a woman a record-setting $110.5 million in the latest lawsuit against Johnson & Johnson, alleging its baby powder caused cancer.  Three previous St. Louis juries awarded a total of $197 million to plaintiffs making similar claims.  All the cases are under appeal.

J&J disputes the scientific evidence behind the allegations, and other juries have found in its favor, or the judge threw the cases out.

But the NBC News report I watched tonight showed a container of talcum powder that was “made in China,” and it’s just a reminder for you dog lovers, and purchasers of anything like dog food, hand soap, shampoo, soup, that sort of thing.  Never, ever buy it if it is made there.  Especially dog food and treats.

Remember, I’ve been there a few times...not necessarily on first-class tours...out in the countryside...and I’ve seen the duck ponds and the like, and flown over the heavily polluted rivers.  The place is a cesspool, and anything with water in the manufacturing process is tainted...period.

--Yum Brands reported solid earnings, with a big rise in same-store sales at Taco Bell, up 8%, well above expectations.  [Led by $1 Double Stacked Tacos and the sale of more than 25 million Naked Chicken Chalupas, tacos in a fried chicken shell....Mmmmm...]

Yum’s KFC brand saw same-store sales growth of 2%, below estimates, while Pizza Hut reported a 3% drop, its third straight quarterly decline, as rival Domino’s eats its lunch, and dinner.

[Remember, last year Yum split off Yum China, which earlier reported same-store sales growth of 1%.]

--According to a story in Bloomberg by Tim Loh, coal output in southern West Virginia is up 9 percent compared with a year ago, the pickup coming in just the last few months, owing to Chinese production curbs and President Trump’s moves to deregulate various sectors impacting the coal industry.

But there is a lot of ground to make up.  From 2008 to 2016, production from these same southern West Virginia coalfields fell from 117 million tons to 36.6 million, according to the U.S. Mine Safety and Health Administration.  It’s all been about cheap natural gas.

Let’s see where things stand a year from now.

--Italian airline Alitalia filed for bankruptcy this week, the third time since 2008.  The first two times the government helped engineer rescue plans.  This time both the government and the Italian people have had enough.

A big reason for the change in heart is the overall health of the Italian banking sector, which has nearly $400bn in bad debt.

Now, Alitalia will be in the hands of a group of administrators who will be charged with coming up with a last plan for the carrier within 180 days, with options including selling it or putting it into liquidation.  [I’ll take the Peroni.]

But to get an idea of the inherent problems at Alitalia, the following by the New York Times’ Liz Alderman sums it up perfectly.

“Company officials had said that in order to keep the carrier alive, adjustments were needed in the 12,400-strong work force, which operates around 120 planes and had 22.6 million passengers last year.  By contrast, its low-cost rival Ryanair has around 11,000 employees for 300 planes and more than 100 million passengers.

“But when unions and management negotiated a rescue plan involving 1,600 layoffs, an 8 percent pay cut and more working days a year in exchange for 2bn euro in new financing, employees rejected it.”

Italy’s major political parties have yet to weigh in, at least last I saw. 

--Canada’s unemployment rate in April fell to 6.5% from 6.7%, though this was mainly because fewer people sought work, rather than robust job gains.  The economy added only 3,200 jobs in the month, mostly in part-time employment, as released by Statistics Canada on Friday.

--The organic food industry’s most aggressive industry watchdog, The Cornucopia Institute, filed formal legal complaints against Aurora Dairy and their organic certifier, the Colorado Department of Agriculture, after Peter Whoriskey of the Washington Post wrote a scathing piece, presenting evidence the largest organic milk producer in the U.S. has been operating fraudulently.

Aurora Dairy is the largest supplier of “private label,” or store-brand, organic milk in the U.S. for the likes of Walmart and Costco.

But when Whoriskey and his Post colleagues visited the main Weld County, Colorado complex, they found a giant feedlot where nearly 15,000 cows were confined to dirt and manure-covered pens rather than being out on pasture as the organic law requires.  Can you believe this?  What a bunch of freakin’ dirtballs!!!

Yours truly has never, ever bought any food looking specifically for the organic label.  I’ve always felt, heck, how do you know?  I do hope with the animal-rights movement, though, that if I’m buying pork or something from a major producer, Lil’ Porky has had a relatively painless death, ditto Stanley the Steer.

But as to the organic milk issue, picture you’re a small-time dairy farmer doing the right thing, selling your milk as organic, yet your price is going down because of mass production from the likes of Aurora that is blatantly breaking the rules!

I’ve always felt we as a society are far too lenient on white-collar type crime.  Change the rules.  Give execs at Aurora, if the charges are accurate, life in prison.  That’ll fix it.

--I was reading a piece in Wired Magazine on Bangalore, India, a high-tech outpost for the likes of Oracle, Dell, IBM and GE, as well as countless others.  But there is a huge problem.  Bangalore is rapidly running out of water, fast. 

“Cities all over the world, from those in the American West to nearly every major Indian metropolis, have been struggling with drought and water deficits in recent years.  But Bangalore is an extreme case.  Last summer, a professor from the Indian Institute of Science declared that the city will be unlivable by 2020.  He later backed off his prediction of the exact time of death – but even so, says P.N. Ravindira, an official at the Bangalore Water Supply and Sewerage Board, ‘the projections are relatively correct.  Our groundwater levels are approaching zero.’”

It’s not just about endless drought, since 2012.  Bangalore’s population nearly doubled from 5.7 million in 2001 to 10.5 million today.  Good lord.  “By 2020 more than 2 million IT professionals are expected to live here.”

--Megyn Kelly is going to make her debut on NBC in an appearance with Vladimir Putin at his annual St. Petersburg International Economic Forum the first week in June. 

Whoopty-damn-do.  CNBC had this exact interview about four weeks ago, which wasn’t pointed out in the New York Post exclusive.

Showtime actually has a four-part Putin interview, with filmmaker Oliver Stone interviewing him over four consecutive nights from June 12.  Huh.

--Ryan Seacrest has been named Kelly Ripa’s “Live” co-host, which sets up a battle between the duo and Megyn Kelly, when she starts her morning show.

It took Ripa one year to come up with a successor to co-host Michael Strahan.

--Finally, the Writers Guild of America reached a last-minute deal for a new film and TV contract with the major studios and networks, thus averting a potentially devastating strike that would have done a number on the economy of Los Angeles, the industry overall employing about 240,000 people.

Healthcare and the new world of streaming and pay TV, as well as how the writers were paid residuals on same, were the key sticking points.

Foreign Affairs

North Korea: Pyongyang confirmed the arrest of a U.S. professor the week before for trying to “overturn” the regime. Kim Sang-duk, or Tony Kim, became the third American to be held in the North when he was detained April 22 as he tried to leave the country.

Tuesday, the North said the U.S. decision to fly two supersonic B-11B Lancer bombers in the area in a training drill is another provocation.

“The reckless military provocation is pushing the situation on the Korean peninsula closer to the brink of nuclear war,” the North’s official KCNA news agency said, according to Reuters.

In a taped interview broadcast Sunday on CBS’ “Face the Nation,” President Trump said he would not discuss the possibility of military action, saying: “It is a chess game. I just don’t want people to know what my thinking is.”

Trump then said he would be willing to meet with Kim Jong-un, “honored,” in fact.  Trump also said in the interview that Kim, who assumed office in his 20s, had held power despite efforts by “a lot of people” to take it away.

“So, obviously, he’s a pretty smart cookie,” Trump said.  He also blows his rivals literally to pieces.

In comments to Bloomberg News about Kim, Trump said: “If it would be appropriate for me to meet with him, I would absolutely, I would be honored to do it.”

Seoul was baffled by the new leader of their strongest ally and military protector, though some leaders in government think an unorthodox approach could be just what’s needed.

Once again national security adviser H.R. McMaster, speaking on “Fox News Sunday,” tried to allay Seoul’s fears, saying North Korea is acting in “open defiance of the international community.”

“North Korea poses a grave threat to the United States, our great allies in the region, South Korea and Japan...but also to China and others. And so it’s important, I think, for all of us to confront this regime.”

“This regime that is pursuing the weaponization of a missile with a nuclear weapon. And so this is something that we know we cannot tolerate...The president has made clear that he is going to resolve this issue one way or another.”

Kim, by the way, has never met with a foreign leader since taking charge following his father’s death in 2011, including China’s Xi.

This week, North Korea issued a rare direct criticism of China through an official commentary saying its “reckless remarks” on Pyongyang’s nuclear program are testing its patience and could trigger unspecified “grave” consequences.

China responded through its Communist Party mouthpiece the Global Times, among other outlets, calling on Pyongyang to immediately halt its nuclear activities.

“China will not allow its northeastern region to be contaminated by North Korea’s nuclear activities,” the paper declared.

The paper also warned that China would impose an oil embargo against the North in response to any more nuclear testing.

Mark Helprin / Wall Street Journal

“Over two decades the U.S. has run the extremes from President Clinton’s foolish or deceptive claim that his diplomacy had solved the North Korean nuclear problem, through the serial procrastinations of subsequent administrations, until the belated realization that if nothing else works the U.S. will have to attack North Korea full force.  The first option has failed.  The second, to which it is possible we may be compelled, is catastrophic.

“The heart of South Korea’s economy and half its 50 million people are densely concentrated within range of the approximately 10,000 North Korean artillery pieces, rocket launchers, and short-range ballistic missiles capable of delivering chemical munitions, of which North Korea has an estimated 5,000 metric tons. Even conventional explosives would have a devastating effect.  No matter how fast South Korean and American forces raced to suppress such fires, not to mention a nuclear attack itself, millions would probably die.

“With such shock and escalation there is no guarantee that China or Russia would not come to North Korea’s aid.  Russia could also take the opportunity to feast upon Eastern Europe if American power were monopolized by the battle, as it would be....

“The fundamental dynamics of interests and security are now bringing China into a genuine, if temporary, alignment with the U.S., Japan, and South Korea.  The U.S. should be wide awake to this in the days to come, because it may be, in fact, the only way out.  If not, Katy bar the door.”

David Ignatius / Washington Post

“Trump’s flurry of recent diplomatic comments has been as volatile as a fever chart.  He talked last week of ‘major, major conflict’ with North Korea, whose leader’s rationality he earlier questioned. But then on Monday, Trump said he would be ‘honored’ to talk to Kim, ‘under the right circumstances.’

“Trump had accused China during the 2016 campaign of ‘raping’ America and threatened initially to alter the one-China foundation of U.S. policy.  But now, Beijing is the cornerstone of his strategy for dealing with North Korea.  Some Asia specialists fear that he has all but subcontracted some aspects of policy to China’s Xi, seemingly his new best friend....

“Trump’s basic ambition to shake up the status quo makes sense, but let me offer some caveats:

“Trump is too vain and self-centered in his approach.  All presidents believe in the efficacy of their personalities, but Trump’s braggadocio risks making him look ridiculous.  He’s too impatient for quick wins....

“He’s too inexperienced to rely so much on his gut instincts. He doesn’t have a very educated gut, to put it bluntly. Aides who brief his team come away amazed that Trump never seems to have thought before about the U.S. nuclear deterrent, or the complications of Chinese-Korean history. Harry S. Truman had read a library full of history books before his accidental presidency. Not so Trump.

“He’s so full of bluster at the start of negotiations, and so accommodating later, that he risks looking like a man who can be had....

“He needs to think more about process.  Let’s imagine that North Korea announced tomorrow it would suspend nuclear tests and return to the bargaining table.  What position would the United States take?”

*I am aware of North Korea’s accusation today that the U.S. and South Korea were behind a plot to kill Kim Jong-un.  U.S. officials I saw Friday afternoon laughed it off.

Syria/Iraq: Iraqi forces opened a new front against ISIS in Mosul this week, as the government is trying to break fierce resistance from militants in the Old City.  The Iraqi advance had stalled, while U.S. forces are being drawn closer to the front lines and civilian casualties rise.

U.S. Army Lieutenant Colonel James Browning told Reuters Thursday that ISIS was trying to keep some streets open in order to use suicide car bombs.

Saturday, a 25-year-old platoon leader with the U.S. Army’s 82nd Airborne Division was killed by an IED outside Mosul.  The soldier was First Lt. Weston Lee of Bluffton, Ga., stationed at Fort Bragg, N.C.

In the Western Iraqi province of Anbar Tuesday, ISIS fighters killed at least 10 Iraqi soldiers near a remote outpost, bringing the death toll of Iraqi military in the area to 26 over just the past few days.

In Syria, there has been talk of safe zones, with Russia, Turkey and Iran having signed a memorandum on creating them at peace talks in Kazakhstan.

But Syria’s armed opposition is totally against the creation of safe zones because it threatens the country’s territorial integrity, while saying they would not allow Iran to be the guarantor of any peace plan, which is a hang-up in Washington as well.

You know how I feel. The time for safe zones was 2012.  It’s too late, if the opposition is to have any say in the matter and of course Syrian President Assad, with Russia and Iran’s help, would love to crush the remaining opposition to make the whole point moot.

As an opposition leader at the peace talks said, “We are against the division of Syria.  As for the agreements, we are not a party to that agreement and of course we will never be in favor (of it) as long as Iran is called a guarantor state.”  Abu Zaid also said that there is “a huge gap” between Russia’s promises and actions.  [Reuters]

Late Friday, Russia announced the first safe zone would go into force at midnight, but Russia’s air force will continue striking ISIS, so they say.  The first and largest safe zone in northern Syria will include Idlib province, the defense ministry said.

*And as I go to post, there is already a potential issue between the United States and Russia and the latter’s definition of which planes can enter the zone.  It appears the Pentagon has told Moscow to go to hell.

Separately, on Tuesday, at least five ISIS fighters donning explosives vests snuck into a refugee camp near the Syrian border town of Rajm al Salibi and launched an attack, killing more than 46 people and wounding scores of others...the very people who sought to escape the carnage.

The attack was seen as the opening of a new front against the Syrian Democratic Forces, a Kurdish-dominated faction supported by the U.S.

Lastly, the Pentagon said at least 352 civilians have been killed in U.S.-led strikes against ISIS targets in Iraq and Syria since the operation began in 2014.  Some outside monitoring groups have the figure as high as 3,000 civilians killed by coalition air strikes.

Afghanistan: Former warlord Gulbuddin Hekmatyar, back in Kabul after two decades in hiding, is calling for peace with the Taliban and offering to act as mediator.  Hekmatyar made his comments at the presidential palace, after President Ashraf Ghani signed a peace agreement with the warlord that brought his political party into the government. 

Hekmatyar is a charismatic figure that many in Kabul don’t trust.

Meanwhile, a suicide car bomber struck a U.S. military convoy in Kabul on Wednesday, killing at least eight Afghan civilians and wounding three U.S. service members.  I did not see if the Taliban or ISIS claimed responsibility.

Saudi Arabia: President Trump announced he plans to visit the kingdom, Israel and the Vatican this month, ahead of a NATO summit, and a Group of 7 meeting; the stops designed to project a symbolic message of unity on his first trip outside the U.S. since taking office.

President Obama visited Saudi Arabia in June of his first year, but didn’t go to Israel until after he was sworn in for a second term.  President George W. Bush didn’t make his first visits to the two countries until the last of his eight years in office.

Trump said: “Saudi Arabia is the custodian of the two holiest sites in Islam, and it is there that we will begin to construct a new foundation of cooperation and support with our Muslim allies to combat extremism, terrorism and violence, and to embrace a more just and hopeful future for young Muslims in their countries.”

Saudi Foreign Minister Adel al-Jubeir hailed the announcement of Trump’s visit.

“It will put to rest the notion that America is anti-Muslim,” he said in Washington.

Egypt: Pope Francis gave Mass in Cairo on Saturday, urging the faithful to transcend their divisions.  “Unless we tear apart the veil clouding our vision and shatter the hardness of our hearts and our prejudices, we will never be able to recognize the face of God,” he said.

“God is pleased only by a faith that is proclaimed by our lives, for the only fanaticism believers can have is that of charity. Any other fanaticism does not come from God and is not pleasing to Him,” Francis said.

In his two-day visit to Egypt, the pontiff was warmly received, with many admiring his tenacity just weeks after twin suicide bombings targeted Christian churches in separate cities, killing 47.

Christians comprise 10% of Egypt’s total 92 million population.

Turkey: Another 3,900 were fired in the second post-referendum purge of civil servants and military members.  The cause of the firings was for suspected links to “terrorist organizations and structures presenting a threat to national security,” according to an official decree in the state newspaper.

In all some 120,000 have been suspended or sacked from their jobs and more than 40,000 arrested in the aftermath of the failed July coup.

Somalia: The U.S. lost a Navy SEAL, two others wounded, in a joint operation with Somali forces against Al Shabaab, the al-Qaeda affiliate.  It was the first death there for U.S. forces since 1993 and “Black Hawk Down.”

Russia: President Trump and Russian President Vladimir Putin held their third phone conversation since Trump took office, and it emerged the two would meet at the G20 Summit in Hamburg on July 7-8.

Tuesday, the two apparently just focused on Syria, and some on North Korea, but the decision to meet in July came from the Kremlin and their readout of the call, not from the strangely silent White House.

Yes, so much for the Bromance.

Separately, in a despicable act, opposition leader Alexei Navalny has been told by Russian authorities that he cannot leave the country for medical treatment after an attack that left him nearly blind in one eye.

Last week, Navalny suffered chemical burns to his right eye after pro-Kremlin thugs attacked him with a kind of dye.

But because he is under two suspended felony sentences, punishment for his opposition to President Putin, he is prohibited from leaving.

The attackers have been identified by Navalny’s supporters, but as is always the case, the Kremlin won’t go after them.

Another opposition leader, Natalia Fyodorova of the Yabloko party, was also blinded after being attacked with an “unknown chemical.

Fyodorova has been an active campaigner against unscrupulous developers in Moscow.

China: Northern China has been dealing with a choking sand/dust storm that was scheduled to descend on Shanghai Friday, after enveloping Beijing and Tianjin.

The sand and dust storms blanketed about 15 percent of the nation’s land mass, according to Xinhua.  Countless airline flights were canceled, for starters. These storms originate in Mongolia and sweep eastward.

Australia: At their meeting on the USS Intrepid Thursday, President Trump and Australian Prime Minister Malcolm Turnbull held their first face-to-face exchange and Trump declared that they “get along great,” following their initial acrimonious phone call.

The problem at the time was Trump didn’t want to honor a refugee agreement that President Obama had cut with the Aussies, but Vice President Mike Pence, in a visit there in April, assured Turnbull the United States would honor it.

Thursday, the two leaders said they were unified on resisting North Korea’s provocations.

Venezuela: Protests between the opposition and forces aligned with President Nicolas Maduro continued, with hundreds of thousands on the streets of Caracas on May Day.  The death toll is over 30.

Random Musings

--President Trump’s job approval numbers have been ticking up.  A Real Clear Politics rolling average through Tuesday had Trump’s approval at 43.5%, which is up from 39.8 on April 4.  Disapproval was 52.8.

The latest Gallup tracking poll has Trump with a 42% approval rating, while Rasmussen is at 48%.

--FBI Director James Comey testified before the Senate Judiciary Committee that he stood by his controversial decision to announce last October that the bureau had reopened its investigation into Hillary Clinton’s private email server.

Comey, in a long defense, said, “It makes me mildly nauseous to think we had an impact on the election,” but he said it would have been “catastrophic” to keep silent when he learned of the discovery of new emails considered pertinent to a probe that had been closed earlier without recommending charges.

“I sat there that morning and I could not see a door labeled ‘no action here,’” he said in response to questions.  “I saw two doors.  One was labeled ‘speak’ and one was labeled ‘conceal.’”

It was Oct. 28, 11 days before the Election, that Comey advised Congress that investigators had uncovered emails that forced him to reopen the case.

The day before Comey’s appearance, Hillary Clinton emerged at a forum to attribute her defeat in the election to interference from Russian hackers and Director Comey.  She also declared she is now “part of the resistance” to Donald Trump.

“If the election had been on October 27, I would be your president,” Clinton said at a Women for Women event in New York.

Hillary said she took “absolute personal responsibility” for her loss, but she didn’t point to her weaknesses as a candidate or the strategy to avoid key states, particularly Wisconsin and Michigan, let alone the single decision that mattered from the beginning...to have a freakin’ private server in her home!!!  There is no Comey investigation, let alone late revelations, without it, but Hillary is all about victimhood, and the truth lies about No. 20 on her list of important values, behind breathable fibers for pantsuits.

“I was on the way to winning until a combination of Jim Comey’s letter on October 28 and Russian WikiLeaks raised doubt in the minds of people who were inclined to vote for me and got scared off,” she said.

Clinton said she was writing a memoir, which no doubt will hit the remainders pile, oh, about 2 days after its release.  I mean, seriously, why would you ever buy a book by this woman?

What many Democratic senators on the Judiciary Committee wondered was why Comey didn’t disclose that there was also a probe looking into Trump campaign ties with Russia.

Comey argued Wednesday that the difference was that the Clinton probe had been closed, and he had already testified before Congress that “there’s nothing there,” thus he was compelled to advise Congress the probe was being reopened.

Henry Olsen / New York Post

“Denial is more than a river in Egypt: It’s Hillary Clinton’s take on why she lost the presidency.  But the data are clear: She didn’t lose because of Russian interference, James Comey or misogyny. She lost because she alienated millions of people who’d voted for President Obama twice.

“The Russian-interference claim is easy to dismiss.  Clinton began her campaign in 2015 with a favorable rating of 50 percent. By that summer, though, her favorable rating had dropped to the mid-40s, and it plummeted further to a mere 41 percent by Labor Day.  Despite a further year-and-a-half of campaigning, she never rose above the 45 percent mark for the remainder of the race.

“It’s easy to know why this happened: Her email scandal surfaced. The first news broke March 2, 2015, in the New York Times.  By that summer, the FBI had announced an investigation into whether classified documents had been compromised.

“This timeline easily disproves the claim that Russian-government interference determined the election.  The initial Times story was based on leaks from the State Department. Later stories also relied on State Department or administration leaks, not emails or info hacked by the Russian government. By the time any now-suspected Russian efforts began to hurt Clinton, she was already mortally wounded.

“Comey’s Oct. 28 letter announcing a continued investigation into her emails should be understood in that context.  Her approval ratings had barely budged all that year, moving between 42 and 38 percent. Her unfavorable ratings also hadn’t budged, moving between 53 and 55 percent.

“Comey’s letter didn’t cause any increase in her unfavorables; in fact, her favorable ratings ticked up a point after its release.  American voters had decided long before that her legal status was irrelevant to their opinion of her.  Non-Democrats had already decided that they didn’t want her to be president....

“Clinton’s final rationale for why she didn’t lose her own race is misogyny. But that doesn’t stand up to scrutiny.  First, why should the appearance of misogyny in the polls be so eerily timed in 2015 with the leaked information about her emails?  Second, why should misogyny be so decisive among the 18 percent who disliked both candidates? Third, if misogyny were so important, why would the Clinton campaign spend all of October telling Americans to vote against Trump because he allegedly hated women?

“Finally, why have the same blue-collar whites who elected Trump voted time and again for Democratic women such as Heidi Heitkamp, Tammy Baldwin, Amy Klobuchar and Debbie Stabenow in their Senate contests?”

--House Republicans may have suffered a big loss as this week Rep. Ileana Ros-Lehtinen, who has represented Miami in Congress since 1989, will not seek reelection in 2018.  Ros-Lehtinen has often clashed with the Trump administration and the more conservative bloc of her party.

But while she won reelection in November by 10 points, Hillary Clinton took her district by 20 points, so it will be targeted by the Democratic Party.

--I watched both President Trump’s speech in Harrisburg, Pa., Saturday, and comedian Hasan Minhaj’s roast at the White House Correspondents’ Association dinner.  To say both were rather divisive would be an understatement, but as someone who watches Wolf Blitzer on CNN in the afternoon’s, Minhaj did have a hilarious takeoff on how everything Wolf, and his network, do seems to be “breaking news.”  I find myself constantly yelling at my screen, “No it isn’t!”  [OK, I don’t actually yell, I muse.]

--An extensive survey out of UCLA of more than 137,000 first-time, full-time college freshmen conducted at 184 U.S. colleges last fall showed that over 42% characterized their political views as “middle of the road,” the lowest share ever recorded in more than 50 years of the study of the American Freshman.

35% said they were “far left” or “liberal,” and 22% said they were “far right” or “conservative.”  Those figures are higher than for the class that entered in 2015.  [Melissa Korn / Wall Street Journal]

--Charles Krauthammer / Washington Post

“With near unanimity, my never-Trump friends confess a sense of relief.  It could have been worse....A deep apprehension still endures but the international order remains intact, the republic still stands, and no ‘enemy of the people’ has (yet) been arrested....

“(Here’s my take): I simply view President Trump as the Wizard of Oz.

“Loud and bombastic. A charlatan.  Nothing behind the screen – other than the institutional chaos that defines his White House and the psychic chaos that governs his ever-changing mind.  What to do?  Ignore what’s behind the curtain.  Deal with what comes out in front: the policy, the pronouncements, the actions.

“And so far they hang together enough – Neil Gorsuch, Keystone XL, NATO reassurances, Syria strike, Cabinet appointments – that one can begin to talk plausibly about the normalization of this presidency.  Hence the relief.  But there are limitations to the Wizard of Oz approach. Some things do extrude from behind the curtain that are hard to ignore....

“Such as, Trump’s late-April pronouncements on South Korea. Being less entertaining, they were vastly underreported. Here’s the context:

“Trump is orchestrating a worldwide campaign to pressure North Korea on its nukes and missiles.  He dispatches (finally) the USS Carl Vinson strike group to Korean waters and raises the possibility of a ‘major, major conflict’ with Pyongyang.  Meanwhile, we are working furiously to complete a THAAD anti-missile system in South Korea to intercept North Korean rockets.

“At which point, out of the blue, Trump tells Reuters that Seoul will have to pay for the THAAD system.  And by the way, that five-year-old U.S.-South Korea free trade agreement is a disaster and needs to be torn up.

“Now, South Korea is in the middle of a highly charged presidential campaign.  The pro-American president was recently impeached and is now under indictment.  The opposition party is ahead.  It is wary of the U.S., accommodating to North Korea and highly negative about installing that THAAD system on its soil.

“We had agreed with Seoul that they would provide the land and the infrastructure, and we would pay the $1 billion cost.  Without warning, Trump reneges on the deal, saying South Korea will have to foot the bill.  This stirs anti-American feeling and gives opposition candidate Moon Jae-in the perfect campaign issue.

“What is it with this president insisting that other people pay for things we want?  And for what?  In a $4 trillion budget, $1 billion is a rounding error.

“So self-defeating was the idea that within three days, national security adviser H.R. McMaster had to walk it all back, assuring the South Koreans that we would indeed honor our agreement and send no $1 billion invoice.

“But the damage was done.  Moon’s campaign feasted.  The pro-American party was thrown on its heels.  And the very future of THAAD – and a continued united front against Pyongyang under a likely Moon administration – is in doubt....

“The South Korean blunder reinforces lingering fears about Trump.  Especially because it was an unforced error.  What happens in an externally caused crisis? Then, there is no hiding, no cushioning, no guardrail.  It’s the wisdom and understanding of one man versus whatever the world has thrown up against us.  However normalized this presidency may be day to day, in such a moment all bets are off.

“What happens when the red phone rings at 3 in the morning?

“I’d say: Let it ring. Let the wizard sleep.  Forward the call to Defense Secretary Mattis.”

--I was horrified by President Trump’s comment this week about Andrew Jackson being angry about the Civil War that began 16 years after his death, and the accompanying statement: “People don’t realize, you know, the Civil War, if you think about it, why?  People don’t ask that question, but why was there the Civil War?  Why could that one not have been worked out?”

George F. Will / Washington Post

“Library shelves groan beneath the weight of books asking questions about that war’s origins, so who, one wonders, are these ‘people’ who don’t ask the questions that Trump evidently thinks have occurred to him uniquely?  Presumably they are not the astute ‘lot of,’ or at least ‘some,’ people Trump referred to when speaking about his February address to a joint session of Congress: ‘A lot of people have said that, some people said it was the single best speech ever made in that chamber.’  Which demotes Winston Churchill, among many others.

“What is most alarming (and mortifying to the University of Pennsylvania, from which he graduated) is not that Trump has entered his eighth decade unscathed by even elementary knowledge about the nation’s history.  As this column has said before, the problem isn’t that he does not know this or that, or that he does not know that he does not know this or that.  Rather, the dangerous thing is that he does not know what it is to know something.”

On the other side, Professor James W. Loewen, Univ. of Vermont / Washington Post

“(Trump’s) comment about Jackson was in the service of his wider discussion of the Civil War.  ‘People don’t ask that question,’ he said in an interview with the Washington Examiner, ‘but why was there the Civil War?’

“This is truly an important question, and we can only wonder what the president would have said had his interviewer asked, ‘What do you think?’  All too many Americans reply vaguely, ‘states’ rights,’ even though Southern leaders, as they left the Union, made it clear that they opposed states’ rights and even named the states and rights that offended them. Americans are vague because their textbooks are vague; publishers don’t want to offend white school boards in Dixie.

“Trump’s conclusion about Jackson places him in a camp of 1930s historians who called it a ‘needless war,’ in the words of James G. Randall, brought about by a ‘blundering generation.’  That view is a product of its time, and that time is now known as the Nadir of Race Relations.  The Nadir began at the end of 1890 and began to ease around 1940.   It was marked by lynchings, the eugenics movement and the spread of sundown towns across the North.  Neo-Confederates put up triumphant Confederate monuments from Helena, Mont., to Key West, Fla., obfuscating why the Southern states seceded.  They claimed it was about tariffs or states’ rights – anything but slavery.”

--Those $400,000 speaking fees I’ve been writing of for President Obama, including for Wall Street firms, have become a flashpoint for some leading Democrats.

Democratic senators Bernie Sanders and Elizabeth Warren have expressed their disappointment with him, though other Democrats say Obama is a private citizen and is free to pursue new opportunities.

Nina Turner, a former Sanders surrogate, told The Hill, though, that money in politics will be a bellwether issue for liberal candidates in 2018.

“President Obama may not be in politics anymore, but he’s very much a symbol of what Democrats stand for, and so people are disappointed by this,” Turner said.

In defense of Obama, as opposed to Hillary and hubby Bill, they were raising $tens of millions prior to her official run for the White House, while Obama isn’t doing so.

But this is a divide that you can clearly see will extend into the 2020 primary season.  A Sanders-Warren combination to me makes perfect sense. (‘If I have to step down for health reasons, I’ll be replaced by a like-minded liberal,’ could be part of Sanders’ reassuring his base.)

--In another example of why ‘Man’ will never sniff even the Top 100 of the “All-Species List,” the New York Times reports that in Brazil, where there has been a resurgence of deadly yellow fever, health officials are urgently warning the public: Stop killing the monkey.

Mosquitoes are the carriers of yellow fever, not monkeys, but there are some who are clubbing monkeys to death, others burned.

The thing is, monkeys are the “beacons for where yellow fever is spreading,” according to epidemiologists, thus they are putting the human population at greater risk by “killing the messenger.”

Renato Alves of Brazil’s Health Ministry said: “Monkeys are a crucial alert mechanism that we monitor to deploy vaccines and prevention efforts to the right places.”

Yellow fever has killed at least 240 people across Brazil in recent months.  Officials estimate 4,400 monkeys have died.

--Incredibly, the crime rate in New York City continues to go down, with April the safest on record, putting 2017 “on pace for a record year in lows for shootings and homicides,” Mayor de Blasio said Thursday.

Last year there were just 335 murders, the figure having peaked at over 2,100 during the Dinkens / crack era.

The NYPD continues to take advantage of the latest technology and these days it employs “precision policing,” in which investigators focus on people who have shown a pattern of committing crimes.

--Stephen Colbert said he had no regrets about his obscene monologue regarding President Trump, though he acknowledged he may have gone a bit too far with the homophobic accusation, saying “I would change a few words that were cruder than they needed to be.”

--Comedian W. Kamau Bell had an essay in the New York Times on discovering America as a black man and how he spent a vacation with his family in Orange Beach, Ala., and recommended everyone go there.  I went to Orange Beach in the aftermath of the BP oil spill in the Gulf and loved it, except even though it was out of season, I hit a very hot week and you could only be on the beach early in the morning.  The photo of me on my Twitter page was taken from there.

Mr. Bell mentions a particular bar I frequented, Flora-Bama, on the Alabama-Florida border, that was full of atmosphere (and a good way to get out of the heat).

Bell also writes of dialect and I loved the following.

“ ‘Y’all’ is one of the greatest and most useful words ever invented.”  So true.

--Britain’s Prince Philip said he was stepping away from public life in the fall, retiring at the age of 95.  Remarkable.  He’s been a rock for Queen Elizabeth II, who is not expected to do the same.

Shortly after Prince Philip made the announcement, he was at another reception with the queen when a guest told him that he was sorry to hear that the royal was standing down.

“Well, I can’t stand up much!” the prince replied.  [Washington Post]

---

Pray for the men and women of our armed forces...and all the fallen.

God bless America.

---

Gold $1228...down $41 on the week.
Oil $46.47

Returns for the week 5/1-5/5

Dow Jones  +0.3%  [21006]
S&P 500  +0.6%  [2399]
S&P MidCap  +0.3%
Russell 2000  -0.3%
Nasdaq  +0.9%  [6100]

Returns for the period 1/1/17-5/5/17

Dow Jones  +6.3%
S&P 500  +7.2%
S&P MidCap  +4.7%
Russell 2000  +2.9%
Nasdaq  +13.3%

Bulls 58.5
Bears 17.9  [Source: Investors Intelligence]

*Dr. Bortrum posted a new column!

Have a great week. 

Next WIR will be slightly abbreviated, and posted later than usual, as I’ll be heading out of town that day.

Brian Trumbore



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Week in Review

05/06/2017

For the week 5/1-5/5

[Posted 11:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.

Edition 943

[There are some late-breaking news events as I go to post tonight, involving the French election and Syria. It’s impossible for me to cover them in any detail at this stage, but neither is good on the surface.]

The Trump Agenda...Congress....

President Trump achieved his first real legislative success on Thursday as House Republicans, by a 217-213 margin, passed a controversial overhaul of ObamaCare.  Yes, it was but a first step in a process that has a long, long ways to go, but it was an important one especially for two men, Trump and House Speaker Paul Ryan.

The official name, the American Health Care Act, AHCA, will of course be labeled TrumpCare by Democrats from here on, and it’s true the Congressional Budget Office has yet to grace us with their analysis of the costs and impact on insurance coverage, but it’s now out there.

As Republicans celebrated with a rally with the president in the Rose Garden, Democrats waved to Republicans on the House floor, chanting, “Hey, hey, hey, goodbye” – a taunt suggesting the Republicans are toast in the 2018 mid-term elections.  And depending on how the process now goes in the Senate, they just might be.  But, for today, they’ve kept a key campaign promise, ditto the president.

In the immediate aftermath, though, some Republican senators said the House version was dead on arrival.

Republican Sen. Rob Portman (Ohio), for one, told the Wall Street Journal, “I’ve already made clear that I don’t support the House bill as currently constructed, because I continue to have concerns that this bill does not do enough to protect Ohio’s Medicaid expansion population, especially those who are receiving treatment for  heroin and prescription drug abuse.”

Senate Majority Leader Mitch McConnell (R., Ky.) can afford to lose just two seats from his slim 52-48 majority, and it’s not clear what elements of the House package may end up requiring 60 votes rather than a majority, meaning those provisions could be stricken.  [Or Republicans will amend the rules, “reconciliation,” to make it easier.]

Here’s my bottom line...my line since the beginning.  ObamaCare is failing.  That’s a fact.  We all hear the same stories, day after day.  I’m amazed at those people who still can’t accept that.

But it’s the old game of now everyone is used to it, it’s perceived to be a benefit, and we don’t want it taken away.

It’s this attitude that will doom our nation in another generation or so on an even bigger issue, the deficit.  As the deficits explode further, and as interest rates normalize, the interest we pay on the debt will soar in kind and if you think we have issues with taking benefits away today?  Just wait.  You ain’t seen nuthin’ yet, boys and girls.

ObamaCare is now perceived to be just another entitlement, and for decades...DECADES... Congress and the American people haven’t had the will to face the looming crisis.  But I’ll be dead, I think, when it hits us in the face.  Those much younger than me will be forced to break into their neighbors’ homes for food when the real Civil War begins.  You think we’re divided today?  Ha!

But I digress....

Editorial / Wall Street Journal

“The media template for covering the 115th Congress apparently goes like this: When Republicans fail to pass a bill, they’re doomed.  But when they succeed, they’re also doomed.  Thus the same media sages who said the House could never repeal ObamaCare are now saying that the replacement the House passed Thursday can’t pass the Senate.

“The wish is the mother of this analysis, and predictions about the Senate are worth about as much as the guarantees of President Hillary Clinton.  The reality is that the House success, however narrow the 217-213 vote, is the first essential step toward fulfilling the GOP’s top campaign promise.

“While the job was messier than it should have been, the result shows that Republicans can hold a governing majority despite unprecedented media, interest-group and Democratic hostility.  The majority spanned the GOP conference from Michigan libertarian Justin Amash to moderate Carlos Curbelo, who deserves special notice for  political courage considering his swing Miami district.  If you doubt this is a big moment, imagine the media obituaries for Republicans if they had failed.

“Credit goes to House leaders for sticking with their essential product and working around the edges to cajole a majority.  The bill that passed is remarkably similar to the one the GOP leaders first introduced. The changes demanded first by the Freedom Caucus and then some moderates are tweaks that don’t alter the reform’s core architecture.

“The bill includes deregulatory steps to pave the way for a variety of insurance coverage that more people can afford; the largest entitlement reform in decades by devolving control over Medicaid to the states; a $1 trillion spending cut over a decade; tax credits for individual insurance that begin to equalize the tax treatment of health care for individuals and businesses; and the repeal of ObamaCare taxes totaling $900 billion over 10 years.

“The bill doesn’t appeal all of ObamaCare because it can’t without Democratic help under the Senate’s budget rules.  But the bill marks a giant step away from the Democratic march to government-run health care, which is why the political and cultural left have been so vitriolic in their denunciations.

“The Senate will now put its stamp on the policy, and no doubt there will be many perils of Rand Paul-ine moments with only a 52-seat GOP majority. The House bill will change, but reporters who think it is doomed should get off Twitter and make some calls.  Majority Leader Mitch McConnell has been counting votes and calculating necessary compromises for some time.  House Republicans should be prepared that some of their planks may not survive Senate budget rules.  They’ll have to be flexible enough to accept the compromises that are inevitable in a bicameral legislature.  The trump card, so to speak, is that this process will yield a binary political choice: Either Members vote for what emerges from the House and Senate, or live with the status of ObamaCare.”

For his part, President Trump must hit the road and sell the details to the public.

Meanwhile, there was another big legislative act this week, approval of a $1.1 trillion spending bill to keep the government open through the end of the September 30 fiscal year.  Democrats are crowing they secured nearly $5 billion in new domestic spending, which will be harder to strip out of future budgets, while some of Trump’s priorities, including for a border wall, were neutered. And they secured funding for Planned Parenthood, miners’ health benefits and Medicaid payments for Puerto Rico.

But Republicans did gain $15 billion in supplemental defense funding requested by the administration, which is not insignificant, even if it falls short of the original request for about double that.  And it authorizes the largest pay raise for the military in six years, 2.1 percent.

Nonetheless, President Trump was upset by the process and called for changing Senate rules to eliminate the legislative filibuster, suggesting the need for a “good shutdown” to change Washington come September.

“The reason for the plan negotiated between the Republicans and Democrats is that we need 60 votes in the Senate which are not there!  We either elect more Republican Senators in 2018 or change the rules now to 51%,” Trump tweeted.

“Our country needs a good ‘shutdown’ in September to fix the mess!”

Rest up in August, folks!

Finally, following are some excerpts from President Trump’s op-ed in the Washington Post on his first 100 days:

“One hundred days ago, I took the oath of office and made a pledge: We are not merely going to transfer political power from one party to another, but instead are going to transfer that power from Washington, D.C., and give it back to the people.

“In the past 100 days, I have kept that promise – and more.

“Issue by issue, department by department, we are giving the people their country back. After decades of a shrinking middle class, open borders and the mass offshoring of American jobs and wealth, this government is working for the citizens of our country and no one else.

“The same establishment media that concealed these problems – and profited from them – is obviously not going to tell this story. That is why we are taking our message directly to America.

“We have opened the White House doors to listen, engage and act. We’ve invited in labor leaders, factory owners, police officers, farmers, veterans and Democrats, Republicans and independents.

“The change began with the termination of the Trans-Pacific Partnership – a 12-nation pact that would have shipped millions more jobs to other countries.

“But leaving the TPP was only the beginning.  We have also launched an investigation into foreign trading abuses and taken steps to protect the production of American steel and aluminum.  After years of federal contracts going to foreign bidders, we are ensuring that government agencies enforce ‘Buy American’ rules and give preference to American companies – and that American companies hire American workers....

“At the center of our economic agenda, we’ve undertaken the most far-reaching effort in history to remove job-killing regulations.  I’ve ordered that for every one new regulation, two old regulations must be eliminated.  We’ve signed a record 13 Congressional Review Act resolutions to scrap job-crushing regulations, and I’ve signed 29 pieces of legislation in total – a mark not surpassed in the first 100 days since Harry S. Truman....

“On energy, the change has been profound.  We’ve canceled restrictions on the production of oil, natural gas and clean coal.

“What we’ve accomplished on immigration and criminal enforcement is nothing short of historic.  After decades of unending illegal immigration and mass uncontrolled entry, we’ve turned the tide as never before – illegal border-crossings are down 73 percent.  Visa processes are being reformed to substantially improve vetting and screening, and we’ve launched prototypes and bidding for the border wall to stop the scourge of drugs, human trafficking and illegal immigrants from coming into our country....

“The change on defense has been profound as well. The Defense Department has begun to rebuild and restore our military readiness.  We’ve reasserted American leadership by holding the Bashar al-Assad regime in Syria accountable for its monstrous use of banned chemical weapons against helpless, innocent civilians.....

“I delivered on one of my biggest promises, appointing and confirming a new justice to the Supreme Court who will be faithful to the U.S. Constitution....

“As we’ve made these changes – on the border, on our economy, on our security – confidence has soared.  And a survey of manufacturing reveals record-breaking optimism in the future.  Consumer confidence hit a 16-year high.  Thousands of new jobs are being re-shored back to America....

“No longer will we listen to the same failed voices of the past who brought us nothing but war overseas, poverty at home and the loss of companies, jobs and our wealth to countries that have taken total advantage of the United States.

“The White House is once again the People’s House.  And I will do everything in my power to be the People’s President – to faithfully, loyally and proudly champion the incredible citizens who love this nation and who call this God-blessed land their home.”

Wall Street

Friday saw the release of the April jobs report and the figure on nonfarm payrolls reflected an increase of 211,000, better than the 187,500 forecast, with the unemployment rate dropping to 4.4%, the lowest since May 2007.  The March number, though, was revised down from 98,000 to 79,000.  Nonetheless the four-month average is 185,000.

The underemployment figure, U-6, the true level of unemployment, is now down to 8.6%, falling steadily, and this is good, sports fans. It’s the lowest since late 2007, with the average for U-6 two years before the recession being 8.3%.

Average hourly earnings were up 0.3%, though the year on year figure of 2.5% remains below what you want to see in a normal recovery (and below December’s 2.9%), which is far from what the last eight years have seen; the converse, a putrid recovery.

Separately, March personal income rose a less than expected 0.2%, while consumption was unchanged, not good, and continuing a troubling trend.  Business confidence may be rising, but the consumer remains uncertain (despite Trump’s comments above).

The April ISM reading on manufacturing was 54.8 (50 being the dividing line between growth and contraction); while the ISM services reading for the month was a solid 57.5, above estimates.

Meanwhile, the Federal Reserve’s Open Market Committee gathered in Washington this week and, as expected, Chair Janet Yellen and her band of merry pranksters held the line on interest rates, but the odds of a June rate hike, when they hold another confab 6/13-14, rose to 95%.

Even though the first-quarter GDP report was abysmal, with economic growth coming in at an annual rate of just 0.7%, the Fed believes the slowdown is “transitory,” but in their accompanying statement, policymakers had to concede consumer spending had grown “only modestly” lately.

The FOMC said: “The committee...continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2 percent over the medium term.”

With inflation sluggish, as noted in the Fed’s preferred personal consumption expenditures barometer, core PCE at 1.6%, it’s hard to build a case for a June rate hike. That is if the Fed stuck to language it had used for years; that it wanted to first see inflation hit 2% on core for a while, and that it was willing to let it run a little “hot” until it was ensured the economy was in consistent growth mode.

The Fed lifted rates a quarter point in mid-March and signaled it was due to raise another two times in 2017.

Stocks rose a third straight week, powered by solid earnings.  More below.

Europe and Asia

First, a slew of economic data from the eurozone (EA19). 

The flash reading on first-quarter GDP was 0.5% over the fourth-quarter, up a solid 1.7% year over year, as reported by Eurostat.

The unemployment rate for the euro area was 9.5% in March, unchanged from February, but still the lowest since April 2009, and vs. 10.2% in March 2016.

Germany’s jobless rate was 3.9%; France 10.1% (same as a year ago); Italy 11.7% (actually up from 11.5% March ’16); Spain 18.2% (down from 20.3%); Netherlands 5.1%; Ireland 6.4% (down from 8.3%); and Greece 23.5% (Jan.).

The youth unemployment rate in Italy was 34.1%; Spain 40.5% (though down from 46.2% March ’16); and 48.0% in Greece (Jan.)

The final reading on the composite eurozone PMI for April was 56.8 vs. March’s 56.4. 

The April euro area manufacturing PMI was 56.7 (56.2 in March) and 56.4 on services (vs. 56.0).

Germany: 58.2 (mfg.); 55.4 (services)
Italy:  56.2 (mfg.), 73-mo. high; 56.2 (services...best since Aug. 2007!)
France: 55.1 (mfg.), 72-mo. high; 56.7 (services)
Spain: 54.5 (mfg.); 57.8 (services)
Greece: 48.2 (mfg.)

[All PMIs courtesy of Markit]

Chris Williamson, chief economist at IHS Markit:

“With the final reading coming in slightly above the earlier flash estimate, the PMI surveys portray an economy that is growing at an encouragingly robust pace and that risks are moving from the downside to a more balanced situation.

“The April Eurozone PMI is historically consistent with a GDP growth rate of 0.7% [Ed. quarter-over-quarter], with similar rates of expansion signaled for both Germany and France.  Even faster gains are being indicated in Spain and  Ireland, and Italy is also seeing growth perk up, highlighting the increasingly broad-based nature of the current upturn.

“Price pressures remain elevated, and the survey’s price indices suggest that core inflation will trend higher in coming months.

“The encouraging picture from the survey data is likely to help raise many forecasters’ expectations of eurozone economic growth in 2017, and will also no doubt add to speculation the ECB rhetoric will turn increasingly hawkish.”

For now, however, the ECB is in no hurry to end its extraordinary stimulus.

In the U.K., the April mfg. number was a far-better-than-expected 57.3 (vs. 54.2 in March), a 3-year high; services 55.8. [The weaker pound has kept British producers humming, and competitive, on the world stage.]

New car sales in the U.K. for April, however, were down 20% owing to changes in the excise tax).

French Election: Come Sunday night in France, 39-year-old Emmanuel Macron, a man who has never held elected office, will become France’s new president, as all of the polls at week’s end had the same result, Macron defeating far-right candidate Marine Le Pen of the National Front by about a 62-38 margin, and there is zero reason to doubt the eventual result.  Le Pen’s people needed the polls to narrow from the 59-41, 61-39 margins reflected in the post-first round surveys, to about 55-45, to cause the EU and global financial markets to shudder a little, but this is not the case.

But if Macron supporters act like it’s already in the bag and stay home en masse, then we might have a different story.  That said, there is likely to be a high abstention rate of as much as a quarter of the French electorate, with the candidates of the mainstream political parties having been eliminated in the first round of voting April 23.  But these polls have been good.  I’ll say it’s 58-42.

In the final week, Le Pen tried to cement her base in rural and industrial areas, while appealing to those conservatives who supported candidate Francois Fillon; Le Pen going so far as to basically lift one of his campaign speeches verbatim in her May Day appearance outside Paris.*

The next day she was accused of plagiarizing, and later her campaign admitted she lifted it to prove she shared some of his supporters’ values.

*I wrote of my past May Day experiences in Paris last WIR.  It turns out that Marine’s father, 88-year-old fascist Jean-Marie Le Pen, held a small demonstration at Joan of Arc Square on Monday, but Marine held a large rally in the suburb of Villepinte.

There was violence in Paris that day, with at least six policemen hurt, one seriously, with protesters launching petrol bombs in the middle of the city, which would have been disturbing to come upon if you were a naïve tourist. 

Meanwhile, most of France’s leading trade unions told their members not to vote for Le Pen, but only two expressed support for Macron.

For his part, Macron rejected calls from the Left to amend the pro-business reforms in his program, though he still needs some left-wing votes.

The two candidates held an extraordinary, vicious final debate Tuesday night, with tons of personal insults hurled at each other.  Macron accused Le Pen of being a “parasite” on the French political system, while Le Pen suggested that Macron would rule with a German whip. Le Pen also made fun of his marriage; he being 39, his wife 64.

Le Pen is already saying that if she receives more than 40 percent, it would be “an enormous victory” that would position the party “as the only real, credible opposition.”  [This wouldn’t be far from the truth.  But the National Front needs to poll well in the parliamentary elections next month.]

Separately, former President Obama endorsed Macron in a video message released by the Macron campaign on Thursday.  That would irritate the hell out of me if I was a French voter.

“I’m not planning to get involved in many elections now that I don’t have to run for office, but the French election is very important to the future of France and the values that we care so much about,” said Obama.

As a sign of confidence in Sunday’s vote, the gap in yield between the German and French 10-year bonds has narrowed to the smallest in over six months.

One more, there are signs that Macron’s year-old En Marche! movement is set to emerge as the largest party in parliament, when those elections are held in June, meaning he would probably be able to push through his program, which was a concern just a few weeks ago.

*But as I go to post, the Macron campaign announced Friday night that it was the victim of a “massive” computer hack, with its campaign emails posted to a document-sharing site just hours ago.  Of course the Kremlin is the prime suspect, as they do not want Macron to win.  The details of what has been leaked, let alone the authenticity of the emails, is not known as I close up for the week.  The French government, by law, is not allowed to comment as official campaigning is now ended.

Brexit: The latest polling for Britain’s snap election, June 8, shows Prime Minister Theresa May’s Conservatives with a 19-point lead over Labour, 47-28, according to an ICM survey. It had been 22 in this one.  The Liberal Democrats are at 9% and Eurosceptic UKIP is at 8%.

An ORB poll for the Sunday Telegraph had it 42-31, but this is definitely an outlier.

May’s hopes of victory were boosted with results in local contests this week that showed Labour suffering losses and the UKIP vote collapsing.

The Conservatives won the West of England metro-mayor contest and gained control of five councils.

The UKIP losses are significant in that their voters are switching to the Tories (Conservatives), which could provide a further boost to the prime minister (and another reason why the ORB poll last Sunday is wrong! mused your editor).

Results from 17 of the 88 councils holding elections in England, Scotland and Wales showed the Conservatives with 429 councillors, a net gain of 109, while Labour had 231, a net loss of 58.

Meanwhile, last weekend the European Commission came up with its negotiating guidelines for Brexit at a summit in Brussels, wherein EU leaders suggested Prime Minister May’s ambitions for the negotiations, such as on a “comprehensive” free-trade deal with the EU at the same time as it negotiates its departure from the bloc, were totally unrealistic, with Mrs. May denying she was in a “different galaxy” from them.  It has become immediately clear this is going to be a very rough two years of talks, as I told you would be the case going back to last June and the referendum.

May told the BBC’s “Andrew Marr Show,” “The EU has also said that nothing is agreed until everything is agreed. I want to ensure that we agree on a trade deal and our withdrawal arrangements so that we know what both of those are when we leave the European Union.”

Earlier, European Commission President Jean-Claude Juncker told the summit that Mrs. May had impossible expectations, with German Chancellor Angela Merkel having earlier warned that some in London harbored “illusions” about what Brexit could achieve.

Britain’s Brexit secretary, David Davis, said the negotiations would be handled with “goodwill” but would be “tough and, at times even confrontational.” 

Merkel said there was no conspiracy to punish Britain.

The EU, though, says British expectations on the pace of divorce discussions are over-optimistic.  Juncker said “our British friends underestimate the technical difficulties we have to face.”

The EU also wants the British to agree to guarantee the rights for European nationals living in the U.K. and eventually the right to remain there, including those who arrive up to the eve of Brexit, which today is expected to be around March 2019.

And remember, part of Brexit is a financial settlement, as Britain is still responsible for its share of future EU expenses, such as on pension obligations. First estimates were Britain would receive a bill of between 40bn and 60bn euros, but there are some stories out there talking about a bill of up to 100bn.

David Davis said in response to the figures being bandied about, “We have said we will meet our international obligations, but there will be our international obligations including assets and liabilities and there will be the ones that are correct in law, not just the ones the Commission wants.”

There are also stories EU members want to limit Prime Minister May’s access to future summits, but Davis said he will not stand for such treatment while the U.K. is still technically a full member.

The bottom line is the EU must ensure the U.K. is worse off outside than inside, to avoid setting a precedent.

For her part, Prime Minister May struck back at Juncker, accusing him of trying to sabotage the June 8 vote in Britain by leaking details of their Brexit discussions.

“The events of the last few days have shown that – whatever our wishes, and however reasonable the positions of Europe’s other leaders – there are some in Brussels who do not want these talks to succeed, who do not want Britain to prosper,” May said.

Continuing, May added that “Britain’s negotiating position in Europe has been misrepresented in the continental press,” that “threats against Britain have been issued by European politicians and officials” and that all of “these acts have been deliberately timed to affect the result of the general election.”

What particularly set off Mrs. May was the leaking of details of her April 26 dinner with Juncker to a German newspaper, but this gave her an opportunity to set the debate between herself and a bunch of EU bureaucrats.

Later in the week, Donald Tusk, president of the European Council, called for a calmer tone to negotiations.

The talks are “difficult enough,” he tweeted on Thursday.  “If emotions get out of hand, they’ll become impossible.”

The reason why the trade issue is so big is because Mrs. May wants to show voters she is getting them something from the breakup.  But every EU member must agree to move on to trade and EU negotiator Michel Barnier said the target for that is the end of this year, likely meaning a Dec. 14 scheduled summit.

That would leave only around 12 months to work on a trade pact for tariff-free commerce (thru end of 2018), and consider that it took the EU and Canada seven years to strike a recent accord.  Plus, unless all 27 EU leaders agree to an extension of Brexit talks, the U.K. would leave the EU in 2019 without a deal, thus the EU has all the leverage in the negotiations.

The Brexit discussions won’t begin in earnest until after the June vote in the U.K.

This whole mess is just getting started.

Greece: A deal with creditors on details for a new set of reforms has been reached, but they must be approved by the Greek legislature before the country can receive the next round of bailout funding from its 86bn euro program.

There are new structural measures and fiscal reforms, including another round of pension cuts, which are to be applied in 2019.  Pensions have already been reduced by over 40 percent since 2011, and now they are to be cut another 18 percent, so you can imagine the public is not too pleased.

But the government of Alexis Tsipras must get this through parliament and in time for a euro area finance ministers meeting on May 22.

Tsipras’ ruling leftwing Syriza and his rightwing coalition partner hold just a three-seat majority, with opinion polls showing the opposition center-right New Democracy with a double-digit lead, meaning the coalition will back the measures unanimously, or else a snap election would be triggered and that would be a disaster.

If Greece doesn’t get the bailout funds, they won’t be able to meet their July debt service payments of more than 6bn euro.

The agreement by the legislature would also secure the IMF’s participation in the current bailout, which has been a requirement of Germany.

But the IMF wants Greece to receive debt relief before it joins the bailout, while the German government rules out such a “haircut” ahead of September’s election there.

Ergo, this whole thing is still a mess, but it is believed once again Greece, and the continent, will dodge a bullet.  [After the September election, you would think Germany and the IMF will reach an agreement of their own on the debt relief topic.  You can understand why the German people are tired of throwing their good money after bad.]

Italy: Former prime minister Matteo Renzi staged a political comeback less than five months after he resigned, easily regaining the leadership of the ruling Democratic Party (PD) last weekend.  Renzi received 72 percent of the party faithful

A national vote is due by May 2018, and today the polls show the PD behind the anti-establishment 5-Star Movement, which questions the country’s euro membership.  Yes, this is the next potential crisis for the EA19.

Turning to Asia, in China, the private manufacturing (Caixin) PMI figure for April was just 50.3 vs. 51.2 in March, while the services figure cooled to 51.5 from 52.2.  The manufacturing number was the worst since September.  [The official government manufacturing PMI, as previously announced, was 51.2; the government’s reading on services was 54.0 vs. 55.1 in March.]

GDP was 6.9% in the first quarter, stronger than expected, but remember, Beijing’s full-year target is growth of 6.5%, so with the PMIs showing less vigorous activity, due to the government’s ongoing efforts to cool the property sector, while it also attempts to contain financial risks, we’re likely to see 6.5% growth, or slightly below, the rest of 2017, and by next January, when the GDP data is added up...voila!  It will be 6.5%!  [Maybe 6.6%.]  Yes, just like magic.  Amazing how that works when one man runs everything in the country.

In Japan, the April manufacturing PMI was 52.7 vs. 52.4 in March, with services at 52.2 vs. 52.9.

South Korea surprised with its figure for April exports, up a far-more-than-expected 24.2%, year over year, the fastest pace since August 2011.

Exports of memory chips soared 56.9%, amid rising demand for high-tech products.
Exports to the U.S. rose 3.9%, and were up 10.2% to China despite the bad blood between these two over the deployment of the THAAD missile defense system in South Korea (more below).

Separately, South Korea’s manufacturing PMI came in at 49.4, though this was an improvement from March’s 48.4.

[Taiwan’s April manufacturing figure was 54.4, solid, but down from 56.2 in March.]

Street Bytes

--Nasdaq hit another all-time high during the week, closing at a record 6100 today, ditto the S&P 500, which finished at a record 2399.   The Dow Jones would have closed at a record of its own, were it not for the news Warren Buffett had cut his stake in IBM 30%, and the stock fell 2.5% in response.  The Dow, at 21006, was just nine points shy of its high.

Revenue growth among the 400 or so S&P 500 companies reporting earnings thus far has been solid, up around 8%.

--U.S. Treasury Yields

6-mo. 1.00%  2-yr. 1.31%  10-yr. 2.35%  30-yr. 2.98%

Yields are inching up with the feeling that the Fed is preparing to move again, but the bond market is still too sanguine.  The Atlanta Fed’s GDPNow indicator for the second quarter has Q2 growth at 4.2%, vs. the 0.7% number registered in the first.

Granted, this figure often starts high and then slides as the quarter progresses, but if it stays up there a month from now, you won’t be talking about a 2.35% 10-year.

--So much for the impact of OPEC’s production cuts.  Oil slid this week back to $45 a barrel for the first time since the cartel announced the cuts, before rallying a bit to $46.47 at week’s end, still down over $6.00 in just three weeks.  It’s all about U.S. shale production ramping up again, which is blunting the impact of OPEC’s moves. 

OPEC and Russia are going to extend the cuts into the second half, with the former holding a meeting May 25 in Vienna to formally extend them.

--I have written extensively of how the average home price in America is substantially higher now than its prior high-water marks, as measured by both the S&P CoreLogic / Case-Shiller data, as well as the National Association of Realtors, but this week, real estate research firm Trulia issued a report, with their chief economist weighing in on the topic.

“The U.S. housing market hasn’t recovered. When you actually look at the value of any individual house, you’re much more likely to find houses that haven’t reached their” previous highs.

Trulia argues that indices such as Case-Shiller and the Federal Housing Finance Agency give more weight to expensive homes, while it looks at the market value of each home compared with its prerecession peak.

Trulia’s work thus concludes that only 34.2% of homes nationally have surpassed their previous highs.

--The blizzard last weekend in the Plains States, from the Texas Panhandle to Nebraska, with 12 inches or more of snow dumped in many areas, did a big number on cattle, winter wheat and other crops.

For example, wholesale beef prices jumped to a 13-month high as a Kansas livestock group estimated the storm may have killed thousands of animals, thus tightening supply.  Feedlots lost a lot of younger animals in particular.

Separately, shares in Archer Daniels Midland fell sharply this week after the company said it was still seeing a grain surplus that would weigh on prices, and its global trading unit, as crops pile up across the globe.  It’s a subdued environment for trading, executives told analysts, ergo smaller trading profits.]

--April was not a good month for auto sales in the U.S. and sales for the year are expected to fall after last year’s record 17.55m level, up from the prior year’s 17.5m.  Most analysts now believe 2017 will be somewhere between 16.5m and 17.0m.

For the month, Ford sales fell 7.2% (down 10.5% on the retail side, flat on fleet sales), General Motors’ declined 5.8%, much steeper than expected, and Fiat Chrysler’s fell 7%.

There are big inventories to work off these days.

Among the others, Toyota Motor’s sales dropped 4.4% in April, Honda’s decreased 7%, and Nisan Motor reported its first sales decline of the year, with April volumes down 1.5%.

--Apple Inc. reported fiscal second-quarter earnings that beat the Street, $2.10 per share, while the company reported revenue of $52.9 billion, also topping analysts’ forecasts.  But it’s estimate for the current quarter on revenue was a little shy.

The thing is, Apple reported falling iPhone sales, so they need to deliver on a blockbuster new phone in the fall with an iPhone revamp.

Apple sold 50.8 million iPhones in the quarter ended April 1, down from 51.2m.

CEO Tim Cook said during a conference call with analysts, “We’re seeing what we believe to be a pause in purchases of iPhones, which we believe are due to the earlier and much more frequent reports about future iPhones.”

Apple had $257bn in cash* and equivalents at the end of the quarter, and it announced $50bn in buybacks and a 63-cent dividend.

*$240bn of this is overseas.

The company is still losing market share in China, with vendors such as Huawei and Vivo gaining in the region, and Apple’s sales there plunged 14%.

Cook said sales of offerings from Apple’s services, such as iCloud, the App Store and Apple Music, grew 18% to $7.04bn.

Mac sales grew by 14.4%, while sales of iPads fell 11.9%, with unit sales down 13%.

Lastly, Tim Cook said Apple was investing $1bn in a U.S.-based “advanced manufacturing fund” as part of an effort to boost U.S. jobs.  During last year’s presidential election, Donald Trump had criticized Apple for relying on overseas manufacturing facilities.

--Facebook topped Wall Street’s estimates for first-quarter revenue, up 49% to $8.03 billion. CEO Mark Zuckerberg said in a statement, “We had a good start to 2017.”

Facebook reported net income of $3.06bn, up from $1.73bn.

The company added 80 million users in the quarter to 1.94bn, who are on the site at least once a month.  Two-thirds of Facebook’s active monthly users visit the site every day.  FB should pass the 2bn user mark in another month or so, and such growth is translating into ad sales.

But the shares declined a bit after the company also reiterated the rate of growth in advertising revenue would continue to decline in 2017, while expenses will rise, with capex increasing to over $7bn, according to analysts.

Zuckerberg also addressed the fake news issue, announcing the company would be hiring an additional 3,000 additional content reviewers to more quickly remove inappropriate material.

--In his quarterly conference call on Tesla’s results, CEO Elon Musk said he screwed up in naming his new midmarket car the Model 3, because “it’s caused confusion in the marketplace.  We’re going to be a broken record on this front because we have to clear up an error.”

Tesla said Wednesday that Model S orders have taken a hit – because some customers think the 3 is a new version of the S, so they’re holding off on a Model S purchase.

“It’s a bit confusing,” Musk said.

Meanwhile, Tesla reported its net loss grew to $397.2 million, or $2.04 per share, in the first quarter.  In the fourth quarter, Tesla lost $219.5 million.

First-quarter revenue rose 18.4% from the previous quarter to $2.7bn, while car deliveries were up 12%, to 25,051.

The Model 3, which will have a list price of $35,000, will commence production in July, and overall production is expected to ramp up to 5,000 cars a week by the end of the year, 10,000 at some point in 2018, with the company having already projected a production level of 500,000 in 2018, after last year’s 84,000 total.

The shares fell sharply on the earnings, but suddenly jumped in the after-market today and I don’t see a ready explanation.

--Elon Musk deserves credit for his SpaceX venture and another successful launch, this time for a sensitive mission for the U.S. military.  Once again the rocket’s booster landed on land, marking the company’s fifth successful mission of the year.

Landing, refurbishing and reusing rockets is a key to SpaceX’s vision of making space travel affordable.

But the Air Force, for which SpaceX now has certification for national security missions such as this one, does not have a policy as yet regarding the use of pre-flown hardware.  Otherwise, it could be lucrative for both parties.

--JPMorgan Chase & Co. will be moving hundreds of London-based bankers to offices in Dublin, Frankfurt and Luxembourg, as JPM prepares for life after Brexit.

Prior to last June’s referendum, CEO Jamie Dimon told U.K. employees that as many as 4,000 could be relocated should Brexit come to pass.

While Frankfurt has long looked to be a major beneficiary, Dublin appears to be an increasingly favored destination for banks’ EU bases.  Luxembourg seems to be favored by asset managers and insurers.

Early projections have London losing around 30,000 jobs, between banking and financial services.  But some estimates rise above 100,000+.

--The Wall Street Journal’s Richard Teitelbaum reports, “The number of deals world-wide involving publicly traded targets this year fell to 793 as of April 28, according to Dealogic, down 20% from 991 in the comparable period last year and the lowest number since 1998.”

It’s about political and economic uncertainty, plus while high stock-market levels have often led to increased deal activity, it seems this time executives are cautious over the valuations.

--Shares in the New York Times rose the most in over four years on Wednesday after the newspaper reported record digital subscriber growth during the first quarter.  The Times said it had signed up 308,000 net digital-only news subscribers in the first three months, the strongest since the company implemented its online paywall in 2011.  Digital news subscriptions reached nearly 2 million, with the paper now counting 3m total print and online subscribers.
But total ad sales were still down 7 percent owing to the ongoing slump in print advertising.

Total revenue rose 5 percent to $399m, ahead of forecasts, with net income of $13.2m.

--A St. Louis jury awarded a woman a record-setting $110.5 million in the latest lawsuit against Johnson & Johnson, alleging its baby powder caused cancer.  Three previous St. Louis juries awarded a total of $197 million to plaintiffs making similar claims.  All the cases are under appeal.

J&J disputes the scientific evidence behind the allegations, and other juries have found in its favor, or the judge threw the cases out.

But the NBC News report I watched tonight showed a container of talcum powder that was “made in China,” and it’s just a reminder for you dog lovers, and purchasers of anything like dog food, hand soap, shampoo, soup, that sort of thing.  Never, ever buy it if it is made there.  Especially dog food and treats.

Remember, I’ve been there a few times...not necessarily on first-class tours...out in the countryside...and I’ve seen the duck ponds and the like, and flown over the heavily polluted rivers.  The place is a cesspool, and anything with water in the manufacturing process is tainted...period.

--Yum Brands reported solid earnings, with a big rise in same-store sales at Taco Bell, up 8%, well above expectations.  [Led by $1 Double Stacked Tacos and the sale of more than 25 million Naked Chicken Chalupas, tacos in a fried chicken shell....Mmmmm...]

Yum’s KFC brand saw same-store sales growth of 2%, below estimates, while Pizza Hut reported a 3% drop, its third straight quarterly decline, as rival Domino’s eats its lunch, and dinner.

[Remember, last year Yum split off Yum China, which earlier reported same-store sales growth of 1%.]

--According to a story in Bloomberg by Tim Loh, coal output in southern West Virginia is up 9 percent compared with a year ago, the pickup coming in just the last few months, owing to Chinese production curbs and President Trump’s moves to deregulate various sectors impacting the coal industry.

But there is a lot of ground to make up.  From 2008 to 2016, production from these same southern West Virginia coalfields fell from 117 million tons to 36.6 million, according to the U.S. Mine Safety and Health Administration.  It’s all been about cheap natural gas.

Let’s see where things stand a year from now.

--Italian airline Alitalia filed for bankruptcy this week, the third time since 2008.  The first two times the government helped engineer rescue plans.  This time both the government and the Italian people have had enough.

A big reason for the change in heart is the overall health of the Italian banking sector, which has nearly $400bn in bad debt.

Now, Alitalia will be in the hands of a group of administrators who will be charged with coming up with a last plan for the carrier within 180 days, with options including selling it or putting it into liquidation.  [I’ll take the Peroni.]

But to get an idea of the inherent problems at Alitalia, the following by the New York Times’ Liz Alderman sums it up perfectly.

“Company officials had said that in order to keep the carrier alive, adjustments were needed in the 12,400-strong work force, which operates around 120 planes and had 22.6 million passengers last year.  By contrast, its low-cost rival Ryanair has around 11,000 employees for 300 planes and more than 100 million passengers.

“But when unions and management negotiated a rescue plan involving 1,600 layoffs, an 8 percent pay cut and more working days a year in exchange for 2bn euro in new financing, employees rejected it.”

Italy’s major political parties have yet to weigh in, at least last I saw. 

--Canada’s unemployment rate in April fell to 6.5% from 6.7%, though this was mainly because fewer people sought work, rather than robust job gains.  The economy added only 3,200 jobs in the month, mostly in part-time employment, as released by Statistics Canada on Friday.

--The organic food industry’s most aggressive industry watchdog, The Cornucopia Institute, filed formal legal complaints against Aurora Dairy and their organic certifier, the Colorado Department of Agriculture, after Peter Whoriskey of the Washington Post wrote a scathing piece, presenting evidence the largest organic milk producer in the U.S. has been operating fraudulently.

Aurora Dairy is the largest supplier of “private label,” or store-brand, organic milk in the U.S. for the likes of Walmart and Costco.

But when Whoriskey and his Post colleagues visited the main Weld County, Colorado complex, they found a giant feedlot where nearly 15,000 cows were confined to dirt and manure-covered pens rather than being out on pasture as the organic law requires.  Can you believe this?  What a bunch of freakin’ dirtballs!!!

Yours truly has never, ever bought any food looking specifically for the organic label.  I’ve always felt, heck, how do you know?  I do hope with the animal-rights movement, though, that if I’m buying pork or something from a major producer, Lil’ Porky has had a relatively painless death, ditto Stanley the Steer.

But as to the organic milk issue, picture you’re a small-time dairy farmer doing the right thing, selling your milk as organic, yet your price is going down because of mass production from the likes of Aurora that is blatantly breaking the rules!

I’ve always felt we as a society are far too lenient on white-collar type crime.  Change the rules.  Give execs at Aurora, if the charges are accurate, life in prison.  That’ll fix it.

--I was reading a piece in Wired Magazine on Bangalore, India, a high-tech outpost for the likes of Oracle, Dell, IBM and GE, as well as countless others.  But there is a huge problem.  Bangalore is rapidly running out of water, fast. 

“Cities all over the world, from those in the American West to nearly every major Indian metropolis, have been struggling with drought and water deficits in recent years.  But Bangalore is an extreme case.  Last summer, a professor from the Indian Institute of Science declared that the city will be unlivable by 2020.  He later backed off his prediction of the exact time of death – but even so, says P.N. Ravindira, an official at the Bangalore Water Supply and Sewerage Board, ‘the projections are relatively correct.  Our groundwater levels are approaching zero.’”

It’s not just about endless drought, since 2012.  Bangalore’s population nearly doubled from 5.7 million in 2001 to 10.5 million today.  Good lord.  “By 2020 more than 2 million IT professionals are expected to live here.”

--Megyn Kelly is going to make her debut on NBC in an appearance with Vladimir Putin at his annual St. Petersburg International Economic Forum the first week in June. 

Whoopty-damn-do.  CNBC had this exact interview about four weeks ago, which wasn’t pointed out in the New York Post exclusive.

Showtime actually has a four-part Putin interview, with filmmaker Oliver Stone interviewing him over four consecutive nights from June 12.  Huh.

--Ryan Seacrest has been named Kelly Ripa’s “Live” co-host, which sets up a battle between the duo and Megyn Kelly, when she starts her morning show.

It took Ripa one year to come up with a successor to co-host Michael Strahan.

--Finally, the Writers Guild of America reached a last-minute deal for a new film and TV contract with the major studios and networks, thus averting a potentially devastating strike that would have done a number on the economy of Los Angeles, the industry overall employing about 240,000 people.

Healthcare and the new world of streaming and pay TV, as well as how the writers were paid residuals on same, were the key sticking points.

Foreign Affairs

North Korea: Pyongyang confirmed the arrest of a U.S. professor the week before for trying to “overturn” the regime. Kim Sang-duk, or Tony Kim, became the third American to be held in the North when he was detained April 22 as he tried to leave the country.

Tuesday, the North said the U.S. decision to fly two supersonic B-11B Lancer bombers in the area in a training drill is another provocation.

“The reckless military provocation is pushing the situation on the Korean peninsula closer to the brink of nuclear war,” the North’s official KCNA news agency said, according to Reuters.

In a taped interview broadcast Sunday on CBS’ “Face the Nation,” President Trump said he would not discuss the possibility of military action, saying: “It is a chess game. I just don’t want people to know what my thinking is.”

Trump then said he would be willing to meet with Kim Jong-un, “honored,” in fact.  Trump also said in the interview that Kim, who assumed office in his 20s, had held power despite efforts by “a lot of people” to take it away.

“So, obviously, he’s a pretty smart cookie,” Trump said.  He also blows his rivals literally to pieces.

In comments to Bloomberg News about Kim, Trump said: “If it would be appropriate for me to meet with him, I would absolutely, I would be honored to do it.”

Seoul was baffled by the new leader of their strongest ally and military protector, though some leaders in government think an unorthodox approach could be just what’s needed.

Once again national security adviser H.R. McMaster, speaking on “Fox News Sunday,” tried to allay Seoul’s fears, saying North Korea is acting in “open defiance of the international community.”

“North Korea poses a grave threat to the United States, our great allies in the region, South Korea and Japan...but also to China and others. And so it’s important, I think, for all of us to confront this regime.”

“This regime that is pursuing the weaponization of a missile with a nuclear weapon. And so this is something that we know we cannot tolerate...The president has made clear that he is going to resolve this issue one way or another.”

Kim, by the way, has never met with a foreign leader since taking charge following his father’s death in 2011, including China’s Xi.

This week, North Korea issued a rare direct criticism of China through an official commentary saying its “reckless remarks” on Pyongyang’s nuclear program are testing its patience and could trigger unspecified “grave” consequences.

China responded through its Communist Party mouthpiece the Global Times, among other outlets, calling on Pyongyang to immediately halt its nuclear activities.

“China will not allow its northeastern region to be contaminated by North Korea’s nuclear activities,” the paper declared.

The paper also warned that China would impose an oil embargo against the North in response to any more nuclear testing.

Mark Helprin / Wall Street Journal

“Over two decades the U.S. has run the extremes from President Clinton’s foolish or deceptive claim that his diplomacy had solved the North Korean nuclear problem, through the serial procrastinations of subsequent administrations, until the belated realization that if nothing else works the U.S. will have to attack North Korea full force.  The first option has failed.  The second, to which it is possible we may be compelled, is catastrophic.

“The heart of South Korea’s economy and half its 50 million people are densely concentrated within range of the approximately 10,000 North Korean artillery pieces, rocket launchers, and short-range ballistic missiles capable of delivering chemical munitions, of which North Korea has an estimated 5,000 metric tons. Even conventional explosives would have a devastating effect.  No matter how fast South Korean and American forces raced to suppress such fires, not to mention a nuclear attack itself, millions would probably die.

“With such shock and escalation there is no guarantee that China or Russia would not come to North Korea’s aid.  Russia could also take the opportunity to feast upon Eastern Europe if American power were monopolized by the battle, as it would be....

“The fundamental dynamics of interests and security are now bringing China into a genuine, if temporary, alignment with the U.S., Japan, and South Korea.  The U.S. should be wide awake to this in the days to come, because it may be, in fact, the only way out.  If not, Katy bar the door.”

David Ignatius / Washington Post

“Trump’s flurry of recent diplomatic comments has been as volatile as a fever chart.  He talked last week of ‘major, major conflict’ with North Korea, whose leader’s rationality he earlier questioned. But then on Monday, Trump said he would be ‘honored’ to talk to Kim, ‘under the right circumstances.’

“Trump had accused China during the 2016 campaign of ‘raping’ America and threatened initially to alter the one-China foundation of U.S. policy.  But now, Beijing is the cornerstone of his strategy for dealing with North Korea.  Some Asia specialists fear that he has all but subcontracted some aspects of policy to China’s Xi, seemingly his new best friend....

“Trump’s basic ambition to shake up the status quo makes sense, but let me offer some caveats:

“Trump is too vain and self-centered in his approach.  All presidents believe in the efficacy of their personalities, but Trump’s braggadocio risks making him look ridiculous.  He’s too impatient for quick wins....

“He’s too inexperienced to rely so much on his gut instincts. He doesn’t have a very educated gut, to put it bluntly. Aides who brief his team come away amazed that Trump never seems to have thought before about the U.S. nuclear deterrent, or the complications of Chinese-Korean history. Harry S. Truman had read a library full of history books before his accidental presidency. Not so Trump.

“He’s so full of bluster at the start of negotiations, and so accommodating later, that he risks looking like a man who can be had....

“He needs to think more about process.  Let’s imagine that North Korea announced tomorrow it would suspend nuclear tests and return to the bargaining table.  What position would the United States take?”

*I am aware of North Korea’s accusation today that the U.S. and South Korea were behind a plot to kill Kim Jong-un.  U.S. officials I saw Friday afternoon laughed it off.

Syria/Iraq: Iraqi forces opened a new front against ISIS in Mosul this week, as the government is trying to break fierce resistance from militants in the Old City.  The Iraqi advance had stalled, while U.S. forces are being drawn closer to the front lines and civilian casualties rise.

U.S. Army Lieutenant Colonel James Browning told Reuters Thursday that ISIS was trying to keep some streets open in order to use suicide car bombs.

Saturday, a 25-year-old platoon leader with the U.S. Army’s 82nd Airborne Division was killed by an IED outside Mosul.  The soldier was First Lt. Weston Lee of Bluffton, Ga., stationed at Fort Bragg, N.C.

In the Western Iraqi province of Anbar Tuesday, ISIS fighters killed at least 10 Iraqi soldiers near a remote outpost, bringing the death toll of Iraqi military in the area to 26 over just the past few days.

In Syria, there has been talk of safe zones, with Russia, Turkey and Iran having signed a memorandum on creating them at peace talks in Kazakhstan.

But Syria’s armed opposition is totally against the creation of safe zones because it threatens the country’s territorial integrity, while saying they would not allow Iran to be the guarantor of any peace plan, which is a hang-up in Washington as well.

You know how I feel. The time for safe zones was 2012.  It’s too late, if the opposition is to have any say in the matter and of course Syrian President Assad, with Russia and Iran’s help, would love to crush the remaining opposition to make the whole point moot.

As an opposition leader at the peace talks said, “We are against the division of Syria.  As for the agreements, we are not a party to that agreement and of course we will never be in favor (of it) as long as Iran is called a guarantor state.”  Abu Zaid also said that there is “a huge gap” between Russia’s promises and actions.  [Reuters]

Late Friday, Russia announced the first safe zone would go into force at midnight, but Russia’s air force will continue striking ISIS, so they say.  The first and largest safe zone in northern Syria will include Idlib province, the defense ministry said.

*And as I go to post, there is already a potential issue between the United States and Russia and the latter’s definition of which planes can enter the zone.  It appears the Pentagon has told Moscow to go to hell.

Separately, on Tuesday, at least five ISIS fighters donning explosives vests snuck into a refugee camp near the Syrian border town of Rajm al Salibi and launched an attack, killing more than 46 people and wounding scores of others...the very people who sought to escape the carnage.

The attack was seen as the opening of a new front against the Syrian Democratic Forces, a Kurdish-dominated faction supported by the U.S.

Lastly, the Pentagon said at least 352 civilians have been killed in U.S.-led strikes against ISIS targets in Iraq and Syria since the operation began in 2014.  Some outside monitoring groups have the figure as high as 3,000 civilians killed by coalition air strikes.

Afghanistan: Former warlord Gulbuddin Hekmatyar, back in Kabul after two decades in hiding, is calling for peace with the Taliban and offering to act as mediator.  Hekmatyar made his comments at the presidential palace, after President Ashraf Ghani signed a peace agreement with the warlord that brought his political party into the government. 

Hekmatyar is a charismatic figure that many in Kabul don’t trust.

Meanwhile, a suicide car bomber struck a U.S. military convoy in Kabul on Wednesday, killing at least eight Afghan civilians and wounding three U.S. service members.  I did not see if the Taliban or ISIS claimed responsibility.

Saudi Arabia: President Trump announced he plans to visit the kingdom, Israel and the Vatican this month, ahead of a NATO summit, and a Group of 7 meeting; the stops designed to project a symbolic message of unity on his first trip outside the U.S. since taking office.

President Obama visited Saudi Arabia in June of his first year, but didn’t go to Israel until after he was sworn in for a second term.  President George W. Bush didn’t make his first visits to the two countries until the last of his eight years in office.

Trump said: “Saudi Arabia is the custodian of the two holiest sites in Islam, and it is there that we will begin to construct a new foundation of cooperation and support with our Muslim allies to combat extremism, terrorism and violence, and to embrace a more just and hopeful future for young Muslims in their countries.”

Saudi Foreign Minister Adel al-Jubeir hailed the announcement of Trump’s visit.

“It will put to rest the notion that America is anti-Muslim,” he said in Washington.

Egypt: Pope Francis gave Mass in Cairo on Saturday, urging the faithful to transcend their divisions.  “Unless we tear apart the veil clouding our vision and shatter the hardness of our hearts and our prejudices, we will never be able to recognize the face of God,” he said.

“God is pleased only by a faith that is proclaimed by our lives, for the only fanaticism believers can have is that of charity. Any other fanaticism does not come from God and is not pleasing to Him,” Francis said.

In his two-day visit to Egypt, the pontiff was warmly received, with many admiring his tenacity just weeks after twin suicide bombings targeted Christian churches in separate cities, killing 47.

Christians comprise 10% of Egypt’s total 92 million population.

Turkey: Another 3,900 were fired in the second post-referendum purge of civil servants and military members.  The cause of the firings was for suspected links to “terrorist organizations and structures presenting a threat to national security,” according to an official decree in the state newspaper.

In all some 120,000 have been suspended or sacked from their jobs and more than 40,000 arrested in the aftermath of the failed July coup.

Somalia: The U.S. lost a Navy SEAL, two others wounded, in a joint operation with Somali forces against Al Shabaab, the al-Qaeda affiliate.  It was the first death there for U.S. forces since 1993 and “Black Hawk Down.”

Russia: President Trump and Russian President Vladimir Putin held their third phone conversation since Trump took office, and it emerged the two would meet at the G20 Summit in Hamburg on July 7-8.

Tuesday, the two apparently just focused on Syria, and some on North Korea, but the decision to meet in July came from the Kremlin and their readout of the call, not from the strangely silent White House.

Yes, so much for the Bromance.

Separately, in a despicable act, opposition leader Alexei Navalny has been told by Russian authorities that he cannot leave the country for medical treatment after an attack that left him nearly blind in one eye.

Last week, Navalny suffered chemical burns to his right eye after pro-Kremlin thugs attacked him with a kind of dye.

But because he is under two suspended felony sentences, punishment for his opposition to President Putin, he is prohibited from leaving.

The attackers have been identified by Navalny’s supporters, but as is always the case, the Kremlin won’t go after them.

Another opposition leader, Natalia Fyodorova of the Yabloko party, was also blinded after being attacked with an “unknown chemical.

Fyodorova has been an active campaigner against unscrupulous developers in Moscow.

China: Northern China has been dealing with a choking sand/dust storm that was scheduled to descend on Shanghai Friday, after enveloping Beijing and Tianjin.

The sand and dust storms blanketed about 15 percent of the nation’s land mass, according to Xinhua.  Countless airline flights were canceled, for starters. These storms originate in Mongolia and sweep eastward.

Australia: At their meeting on the USS Intrepid Thursday, President Trump and Australian Prime Minister Malcolm Turnbull held their first face-to-face exchange and Trump declared that they “get along great,” following their initial acrimonious phone call.

The problem at the time was Trump didn’t want to honor a refugee agreement that President Obama had cut with the Aussies, but Vice President Mike Pence, in a visit there in April, assured Turnbull the United States would honor it.

Thursday, the two leaders said they were unified on resisting North Korea’s provocations.

Venezuela: Protests between the opposition and forces aligned with President Nicolas Maduro continued, with hundreds of thousands on the streets of Caracas on May Day.  The death toll is over 30.

Random Musings

--President Trump’s job approval numbers have been ticking up.  A Real Clear Politics rolling average through Tuesday had Trump’s approval at 43.5%, which is up from 39.8 on April 4.  Disapproval was 52.8.

The latest Gallup tracking poll has Trump with a 42% approval rating, while Rasmussen is at 48%.

--FBI Director James Comey testified before the Senate Judiciary Committee that he stood by his controversial decision to announce last October that the bureau had reopened its investigation into Hillary Clinton’s private email server.

Comey, in a long defense, said, “It makes me mildly nauseous to think we had an impact on the election,” but he said it would have been “catastrophic” to keep silent when he learned of the discovery of new emails considered pertinent to a probe that had been closed earlier without recommending charges.

“I sat there that morning and I could not see a door labeled ‘no action here,’” he said in response to questions.  “I saw two doors.  One was labeled ‘speak’ and one was labeled ‘conceal.’”

It was Oct. 28, 11 days before the Election, that Comey advised Congress that investigators had uncovered emails that forced him to reopen the case.

The day before Comey’s appearance, Hillary Clinton emerged at a forum to attribute her defeat in the election to interference from Russian hackers and Director Comey.  She also declared she is now “part of the resistance” to Donald Trump.

“If the election had been on October 27, I would be your president,” Clinton said at a Women for Women event in New York.

Hillary said she took “absolute personal responsibility” for her loss, but she didn’t point to her weaknesses as a candidate or the strategy to avoid key states, particularly Wisconsin and Michigan, let alone the single decision that mattered from the beginning...to have a freakin’ private server in her home!!!  There is no Comey investigation, let alone late revelations, without it, but Hillary is all about victimhood, and the truth lies about No. 20 on her list of important values, behind breathable fibers for pantsuits.

“I was on the way to winning until a combination of Jim Comey’s letter on October 28 and Russian WikiLeaks raised doubt in the minds of people who were inclined to vote for me and got scared off,” she said.

Clinton said she was writing a memoir, which no doubt will hit the remainders pile, oh, about 2 days after its release.  I mean, seriously, why would you ever buy a book by this woman?

What many Democratic senators on the Judiciary Committee wondered was why Comey didn’t disclose that there was also a probe looking into Trump campaign ties with Russia.

Comey argued Wednesday that the difference was that the Clinton probe had been closed, and he had already testified before Congress that “there’s nothing there,” thus he was compelled to advise Congress the probe was being reopened.

Henry Olsen / New York Post

“Denial is more than a river in Egypt: It’s Hillary Clinton’s take on why she lost the presidency.  But the data are clear: She didn’t lose because of Russian interference, James Comey or misogyny. She lost because she alienated millions of people who’d voted for President Obama twice.

“The Russian-interference claim is easy to dismiss.  Clinton began her campaign in 2015 with a favorable rating of 50 percent. By that summer, though, her favorable rating had dropped to the mid-40s, and it plummeted further to a mere 41 percent by Labor Day.  Despite a further year-and-a-half of campaigning, she never rose above the 45 percent mark for the remainder of the race.

“It’s easy to know why this happened: Her email scandal surfaced. The first news broke March 2, 2015, in the New York Times.  By that summer, the FBI had announced an investigation into whether classified documents had been compromised.

“This timeline easily disproves the claim that Russian-government interference determined the election.  The initial Times story was based on leaks from the State Department. Later stories also relied on State Department or administration leaks, not emails or info hacked by the Russian government. By the time any now-suspected Russian efforts began to hurt Clinton, she was already mortally wounded.

“Comey’s Oct. 28 letter announcing a continued investigation into her emails should be understood in that context.  Her approval ratings had barely budged all that year, moving between 42 and 38 percent. Her unfavorable ratings also hadn’t budged, moving between 53 and 55 percent.

“Comey’s letter didn’t cause any increase in her unfavorables; in fact, her favorable ratings ticked up a point after its release.  American voters had decided long before that her legal status was irrelevant to their opinion of her.  Non-Democrats had already decided that they didn’t want her to be president....

“Clinton’s final rationale for why she didn’t lose her own race is misogyny. But that doesn’t stand up to scrutiny.  First, why should the appearance of misogyny in the polls be so eerily timed in 2015 with the leaked information about her emails?  Second, why should misogyny be so decisive among the 18 percent who disliked both candidates? Third, if misogyny were so important, why would the Clinton campaign spend all of October telling Americans to vote against Trump because he allegedly hated women?

“Finally, why have the same blue-collar whites who elected Trump voted time and again for Democratic women such as Heidi Heitkamp, Tammy Baldwin, Amy Klobuchar and Debbie Stabenow in their Senate contests?”

--House Republicans may have suffered a big loss as this week Rep. Ileana Ros-Lehtinen, who has represented Miami in Congress since 1989, will not seek reelection in 2018.  Ros-Lehtinen has often clashed with the Trump administration and the more conservative bloc of her party.

But while she won reelection in November by 10 points, Hillary Clinton took her district by 20 points, so it will be targeted by the Democratic Party.

--I watched both President Trump’s speech in Harrisburg, Pa., Saturday, and comedian Hasan Minhaj’s roast at the White House Correspondents’ Association dinner.  To say both were rather divisive would be an understatement, but as someone who watches Wolf Blitzer on CNN in the afternoon’s, Minhaj did have a hilarious takeoff on how everything Wolf, and his network, do seems to be “breaking news.”  I find myself constantly yelling at my screen, “No it isn’t!”  [OK, I don’t actually yell, I muse.]

--An extensive survey out of UCLA of more than 137,000 first-time, full-time college freshmen conducted at 184 U.S. colleges last fall showed that over 42% characterized their political views as “middle of the road,” the lowest share ever recorded in more than 50 years of the study of the American Freshman.

35% said they were “far left” or “liberal,” and 22% said they were “far right” or “conservative.”  Those figures are higher than for the class that entered in 2015.  [Melissa Korn / Wall Street Journal]

--Charles Krauthammer / Washington Post

“With near unanimity, my never-Trump friends confess a sense of relief.  It could have been worse....A deep apprehension still endures but the international order remains intact, the republic still stands, and no ‘enemy of the people’ has (yet) been arrested....

“(Here’s my take): I simply view President Trump as the Wizard of Oz.

“Loud and bombastic. A charlatan.  Nothing behind the screen – other than the institutional chaos that defines his White House and the psychic chaos that governs his ever-changing mind.  What to do?  Ignore what’s behind the curtain.  Deal with what comes out in front: the policy, the pronouncements, the actions.

“And so far they hang together enough – Neil Gorsuch, Keystone XL, NATO reassurances, Syria strike, Cabinet appointments – that one can begin to talk plausibly about the normalization of this presidency.  Hence the relief.  But there are limitations to the Wizard of Oz approach. Some things do extrude from behind the curtain that are hard to ignore....

“Such as, Trump’s late-April pronouncements on South Korea. Being less entertaining, they were vastly underreported. Here’s the context:

“Trump is orchestrating a worldwide campaign to pressure North Korea on its nukes and missiles.  He dispatches (finally) the USS Carl Vinson strike group to Korean waters and raises the possibility of a ‘major, major conflict’ with Pyongyang.  Meanwhile, we are working furiously to complete a THAAD anti-missile system in South Korea to intercept North Korean rockets.

“At which point, out of the blue, Trump tells Reuters that Seoul will have to pay for the THAAD system.  And by the way, that five-year-old U.S.-South Korea free trade agreement is a disaster and needs to be torn up.

“Now, South Korea is in the middle of a highly charged presidential campaign.  The pro-American president was recently impeached and is now under indictment.  The opposition party is ahead.  It is wary of the U.S., accommodating to North Korea and highly negative about installing that THAAD system on its soil.

“We had agreed with Seoul that they would provide the land and the infrastructure, and we would pay the $1 billion cost.  Without warning, Trump reneges on the deal, saying South Korea will have to foot the bill.  This stirs anti-American feeling and gives opposition candidate Moon Jae-in the perfect campaign issue.

“What is it with this president insisting that other people pay for things we want?  And for what?  In a $4 trillion budget, $1 billion is a rounding error.

“So self-defeating was the idea that within three days, national security adviser H.R. McMaster had to walk it all back, assuring the South Koreans that we would indeed honor our agreement and send no $1 billion invoice.

“But the damage was done.  Moon’s campaign feasted.  The pro-American party was thrown on its heels.  And the very future of THAAD – and a continued united front against Pyongyang under a likely Moon administration – is in doubt....

“The South Korean blunder reinforces lingering fears about Trump.  Especially because it was an unforced error.  What happens in an externally caused crisis? Then, there is no hiding, no cushioning, no guardrail.  It’s the wisdom and understanding of one man versus whatever the world has thrown up against us.  However normalized this presidency may be day to day, in such a moment all bets are off.

“What happens when the red phone rings at 3 in the morning?

“I’d say: Let it ring. Let the wizard sleep.  Forward the call to Defense Secretary Mattis.”

--I was horrified by President Trump’s comment this week about Andrew Jackson being angry about the Civil War that began 16 years after his death, and the accompanying statement: “People don’t realize, you know, the Civil War, if you think about it, why?  People don’t ask that question, but why was there the Civil War?  Why could that one not have been worked out?”

George F. Will / Washington Post

“Library shelves groan beneath the weight of books asking questions about that war’s origins, so who, one wonders, are these ‘people’ who don’t ask the questions that Trump evidently thinks have occurred to him uniquely?  Presumably they are not the astute ‘lot of,’ or at least ‘some,’ people Trump referred to when speaking about his February address to a joint session of Congress: ‘A lot of people have said that, some people said it was the single best speech ever made in that chamber.’  Which demotes Winston Churchill, among many others.

“What is most alarming (and mortifying to the University of Pennsylvania, from which he graduated) is not that Trump has entered his eighth decade unscathed by even elementary knowledge about the nation’s history.  As this column has said before, the problem isn’t that he does not know this or that, or that he does not know that he does not know this or that.  Rather, the dangerous thing is that he does not know what it is to know something.”

On the other side, Professor James W. Loewen, Univ. of Vermont / Washington Post

“(Trump’s) comment about Jackson was in the service of his wider discussion of the Civil War.  ‘People don’t ask that question,’ he said in an interview with the Washington Examiner, ‘but why was there the Civil War?’

“This is truly an important question, and we can only wonder what the president would have said had his interviewer asked, ‘What do you think?’  All too many Americans reply vaguely, ‘states’ rights,’ even though Southern leaders, as they left the Union, made it clear that they opposed states’ rights and even named the states and rights that offended them. Americans are vague because their textbooks are vague; publishers don’t want to offend white school boards in Dixie.

“Trump’s conclusion about Jackson places him in a camp of 1930s historians who called it a ‘needless war,’ in the words of James G. Randall, brought about by a ‘blundering generation.’  That view is a product of its time, and that time is now known as the Nadir of Race Relations.  The Nadir began at the end of 1890 and began to ease around 1940.   It was marked by lynchings, the eugenics movement and the spread of sundown towns across the North.  Neo-Confederates put up triumphant Confederate monuments from Helena, Mont., to Key West, Fla., obfuscating why the Southern states seceded.  They claimed it was about tariffs or states’ rights – anything but slavery.”

--Those $400,000 speaking fees I’ve been writing of for President Obama, including for Wall Street firms, have become a flashpoint for some leading Democrats.

Democratic senators Bernie Sanders and Elizabeth Warren have expressed their disappointment with him, though other Democrats say Obama is a private citizen and is free to pursue new opportunities.

Nina Turner, a former Sanders surrogate, told The Hill, though, that money in politics will be a bellwether issue for liberal candidates in 2018.

“President Obama may not be in politics anymore, but he’s very much a symbol of what Democrats stand for, and so people are disappointed by this,” Turner said.

In defense of Obama, as opposed to Hillary and hubby Bill, they were raising $tens of millions prior to her official run for the White House, while Obama isn’t doing so.

But this is a divide that you can clearly see will extend into the 2020 primary season.  A Sanders-Warren combination to me makes perfect sense. (‘If I have to step down for health reasons, I’ll be replaced by a like-minded liberal,’ could be part of Sanders’ reassuring his base.)

--In another example of why ‘Man’ will never sniff even the Top 100 of the “All-Species List,” the New York Times reports that in Brazil, where there has been a resurgence of deadly yellow fever, health officials are urgently warning the public: Stop killing the monkey.

Mosquitoes are the carriers of yellow fever, not monkeys, but there are some who are clubbing monkeys to death, others burned.

The thing is, monkeys are the “beacons for where yellow fever is spreading,” according to epidemiologists, thus they are putting the human population at greater risk by “killing the messenger.”

Renato Alves of Brazil’s Health Ministry said: “Monkeys are a crucial alert mechanism that we monitor to deploy vaccines and prevention efforts to the right places.”

Yellow fever has killed at least 240 people across Brazil in recent months.  Officials estimate 4,400 monkeys have died.

--Incredibly, the crime rate in New York City continues to go down, with April the safest on record, putting 2017 “on pace for a record year in lows for shootings and homicides,” Mayor de Blasio said Thursday.

Last year there were just 335 murders, the figure having peaked at over 2,100 during the Dinkens / crack era.

The NYPD continues to take advantage of the latest technology and these days it employs “precision policing,” in which investigators focus on people who have shown a pattern of committing crimes.

--Stephen Colbert said he had no regrets about his obscene monologue regarding President Trump, though he acknowledged he may have gone a bit too far with the homophobic accusation, saying “I would change a few words that were cruder than they needed to be.”

--Comedian W. Kamau Bell had an essay in the New York Times on discovering America as a black man and how he spent a vacation with his family in Orange Beach, Ala., and recommended everyone go there.  I went to Orange Beach in the aftermath of the BP oil spill in the Gulf and loved it, except even though it was out of season, I hit a very hot week and you could only be on the beach early in the morning.  The photo of me on my Twitter page was taken from there.

Mr. Bell mentions a particular bar I frequented, Flora-Bama, on the Alabama-Florida border, that was full of atmosphere (and a good way to get out of the heat).

Bell also writes of dialect and I loved the following.

“ ‘Y’all’ is one of the greatest and most useful words ever invented.”  So true.

--Britain’s Prince Philip said he was stepping away from public life in the fall, retiring at the age of 95.  Remarkable.  He’s been a rock for Queen Elizabeth II, who is not expected to do the same.

Shortly after Prince Philip made the announcement, he was at another reception with the queen when a guest told him that he was sorry to hear that the royal was standing down.

“Well, I can’t stand up much!” the prince replied.  [Washington Post]

---

Pray for the men and women of our armed forces...and all the fallen.

God bless America.

---

Gold $1228...down $41 on the week.
Oil $46.47

Returns for the week 5/1-5/5

Dow Jones  +0.3%  [21006]
S&P 500  +0.6%  [2399]
S&P MidCap  +0.3%
Russell 2000  -0.3%
Nasdaq  +0.9%  [6100]

Returns for the period 1/1/17-5/5/17

Dow Jones  +6.3%
S&P 500  +7.2%
S&P MidCap  +4.7%
Russell 2000  +2.9%
Nasdaq  +13.3%

Bulls 58.5
Bears 17.9  [Source: Investors Intelligence]

*Dr. Bortrum posted a new column!

Have a great week. 

Next WIR will be slightly abbreviated, and posted later than usual, as I’ll be heading out of town that day.

Brian Trumbore